The Hindu Business Line : Navin Fluorine driven by new valuation

THE Navin Fluorine International Ltd stock today closed at the upper circuit of Rs 336.65, up 5 per cent on the BSE, on a new valuation jig in the context of improvement in its fundamentals, growth prospects and additional revenue flow from a 10-year carbon credit deal.

A top company source confirmed that the company has planned a capital expenditure of around Rs 45 crore for the current fiscal. "This would be partly for research and development and partly for expanding operations and increasing efficiency," the source added.

The company's new focus is on speciality chemicals, where margins are higher than the base chemicals used in the pharmaceuticals and agro industries. "We have been shifting towards this segment away from commodity chemicals, which fetch much less realisation," the company source observed.

In the past couple of years, through in-house R&D, the company has developed a large number of processes and products in the segment without opting for technology from outside. As a result of this drive, the exports have jumped 300 per cent in 2004-05 and new products and process have led to a greater marketing edge and better price realisation. The new gas-based power project is also to help improve the bottomline in terms of cost cuts.

According to a fund manager, the operating profit to sales last fiscal was around 25 per cent. "The carbon credit deal would in the least fetch an additional income of Rs 70 crore, if one takes into account $5 per unit. But the carbon credit market has shot up to $14 per unit now," he added.

The company source, however, clarified that the earnings from carbon credit would begin end of 2006-07 for 10 years. The exact price for the credits, however, could not be confirmed. Among its subsidiaries and joint ventures - Mafatlal Burlington, Molex Mafatlal Micron and Uvija Associaties are reportedly doing very well.

"These textile companies have been riding the buoyancy after the dismantling of Multi Fibre Agreement this year. However, the market has not done the valuation of their growth potential appropriately," an analyst commented.

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