Target: ₹3,500

CMP: 3,440.25

We visited Navin Fluorine’s plant based in Dewas, Madhya Pradesh which caters to its CDMO business vertical. The company manufacture pharma intermediates for commercialised (50-60 per cent) and last-stage molecules.

The management revisited its CDMO guidance of $100 million by FY27 on the back of execution of cGMP-4 phase-1 (dedicated for Fermion) and conviction to start phase-2 expansion in the next 6-12 months, subject to addition of new molecules/clients. The overall tone of new CEO Nitin Kulkarni remains positive with respet to all its business verticals, with focus on adding new customers, product life-cycle management, building R&D capabilities, cost rationalisation and local sourcing, capacity utilisation, and governance.

Currently, the company is focusing on process improvement/development for tech-packs/name/structure of molecule provided by its clients, while the management claims to have working relationships with over 20 top pharma innovators globally.

The company had announced capex of ₹290 crore for cGMP 4 with an initial outlay of ₹160 crore in phase-1. This includes construction cost for building the RCC structure, common utilities, and plant & machinery for 16 reactors. The balance 16 reactors will be added in phase-2, taking the overall capacity to 200K ltr. 

We maintain our Reduce rating, slightly upping our TP to ₹3,500.