Navin Fluorine and SRF Shares Surge on Refrigerant Price Hike in the US
Shares of specialty chemical companies Navin Fluorine and SRF surged by nearly 12% on January 9, 2025, driven by news of a significant price hike for refrigerant gases in the US. Both stocks extended their winning streak to a third consecutive trading session.
At 9:46 AM, Navin Fluorine shares were trading at ₹3,887.90 on the NSE, slightly below their 52-week high of ₹4,017.10 touched earlier in the session. Meanwhile, SRF’s share price stood at ₹2,636.95.
Key Drivers Behind the Rally
The sharp rally came after CNBC Awaaz reported that US gas distributors announced price hikes for refrigerant gases due to supply disruptions. IGas USA cited constrained supplies of refrigerants R32 and R125, resulting in a price increase of up to 200%.
Brokerage firm Equirus highlighted the financial impact of these price hikes:
- A $1 per kilogram increase in R32 refrigerant prices could boost SRF’s EBITDA by ₹260 crore.
- For Navin Fluorine, the same increase could improve EBITDA by ₹77 crore.
Why This Matters for Navin Fluorine and SRF
Both Navin Fluorine and SRF are significant players in the refrigerant gas market in India. A global uptick in refrigerant gas prices is expected to bolster their earnings, which have been under pressure for the past two years due to:
- Declining Global Demand: Sluggish demand for refrigerants globally.
- Influx of Chinese Inventory: Increased competition from low-cost Chinese suppliers.
Production Capacities
- SRF: The company has an R32 production capacity of 29,000–30,000 tonnes and nearly 7,000 tonnes for the R125 refrigerant.
- Navin Fluorine: The company’s current R32 capacity is approximately 4,500 tonnes, with plans to double this by adding another 4,500 tonnes in February 2025.
More About Navin Fluorine
Founded in 1967, Navin Fluorine International Limited is a leading player in the specialty chemicals industry, specializing in fluorochemicals. The company operates in four key segments:
- Refrigerant Gases: A core area of focus, with R32 being a major product.
- Specialty Chemicals: Catering to high-growth industries like pharmaceuticals and agrochemicals.
- Inorganic Fluorides: Serving the aluminum, glass, and steel industries.
- Contract Research and Manufacturing Services (CRAMS): Partnering with global clients for research and manufacturing projects.
Financial Performance
Navin Fluorine has demonstrated strong financial resilience over the years:
- In Q2 FY25, the company reported a 25% YoY increase in revenue, supported by strong demand in specialty chemicals and CRAMS.
- The refrigerant gases segment, though previously subdued, is now poised for recovery following the price hikes in the US market.
Expansion Plans
The company has been actively investing in capacity expansion and new product development:
- Capacity Doubling: The R32 production capacity will be doubled to 9,000 tonnes by February 2025.
- New Product Lines: Investments in high-performance materials and specialized fluorochemicals to cater to emerging markets.
Market Sentiment
The recent price hikes have reignited investor confidence in Navin Fluorine and SRF, given their significant exposure to the refrigerant gases market. Analysts expect these developments to improve the companies’ financials substantially in the coming quarters.
Outlook
Navin Fluorine is well-positioned to capitalize on the rising demand for refrigerant gases globally. Coupled with its diversified portfolio, strong research capabilities, and ongoing capacity expansions, the company is poised for long-term growth.
Investors are optimistic about the positive earnings trajectory for Navin Fluorine and SRF, particularly as the global refrigerant market rebounds from a prolonged slowdown.