Navin Fluorine International Ltd Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Vivek Rajamani - Morgan Stanley - Analyst : Hi, sir. Thank you so much for the presentation. Two questions from me. Firstly, on the specialty chemicals, just wanted to understand what gives us the confidence of the visibility or the improved visibility for the second half, given that we have seen some difference in the past. So could you just give some color in terms of what's changed in terms of the conversations that you're having with your customers?

Question: Vivek Rajamani - Morgan Stanley - Analyst : Sure. And just a clarification on this in terms of these orders, are these multilayer orders because you're saying you have the visibility even in calendar '25. Correct?

Question: Vivek Rajamani - Morgan Stanley - Analyst : Sure. That's great to hear. And the second question was on CDMO, I know it's difficult to give a clear number over here but given that you're making traction both your European client and the US client and obviously you have some two new molecules. Could you just give us a sense of what is the trajectory we should expect for the second half of this year as well as going into fiscal '26 in terms of how these will ramp up?

Question: Sanjesh Jain - ICICI Securities - Analyst : Yeah, hi. Good evening. Thanks for taking my question. I got three questions from all the three segments. First on the CMDO if I remove the domestic, which I believe is a supply for the European client, the rest of the business doesn't look very exciting under INR30 crore of revenue. What's happening on that initial stage? Has that completely been defocused? However, we look in at that part of the business? Connected question is that now we have multiple order book one to supply European client, two late-stage product to be supplied in Q3, Q4, one scale project for a US client. So it appears to be jumbled up. Do we have capacity to meet all these orders requirement on time? So that's on the CDMO. On the speciality, domestic suddenly has shown a sharp improvement quarter on quarter. I thought we were deposing the domestic farmer part of business and largely focusing on the agrochemical and the fine side of the business. What has driven this domestic revenue growth in the specialty part of it? And the third question on HPP. Nitin, I guess you mentioned in your opening that we have reached optimal capacity, is it fair to assume that until the new capacity on R22 come, it's only pricing which will drive the incremental growth in the HPP?

Question: Sanjesh Jain - ICICI Securities - Analyst : (technical difficulty)

Question: Sanjesh Jain - ICICI Securities - Analyst : I said that we have optimized the capacity utilization on most of the product is what Nitin said in his opening remark. That means until the new R32 capacity come in, it is only pricing which can drive the growth in that segment.

Question: Sanjesh Jain - ICICI Securities - Analyst : Just one follow up on all those answers. Anish, you said that cGMP4 will help us. But I was more asking from the second half of FY25. Now we have to deliver so many four products. Do we have capacity from --

Question: Madhav Marda - Fidelity International - Analyst : Hi. Good evening. I have two questions. Firstly, on the specialty chemical business, when we see that we have strong visibility into second half of FY25, does that mean that if you compare to the last year of the second half, we are looking at year over year growth coming back for us because first half have been obviously impacted by the industrial level challenges which you.

Question: Madhav Marda - Fidelity International - Analyst : Okay. So second half specialty chemical, you can grow over last year. My second question was on the CDMO of business, given that we are addressing pipeline molecules of pharma customers, innovator customers. It just a suggestion, could we start giving this in the presentation how many molecules we have in different phases like Phase 1, Phase 1, Phase 3? And how many are in the process of registration just for a disclosure. So it just become easier for us to track it every quarter.

Question: Madhav Marda - Fidelity International - Analyst : The total number of molecules that we are addressing is just a phase wise --

Question: Madhav Marda - Fidelity International - Analyst : No. I understand that. I'm just saying that given that this is CDMO business for innovative pharma customers, that's all in India, if you look at some of the other names. So just for us to maybe make a comparison.

Question: Abhijit Akella - Kotak Securities - Analyst : So just one clarification first regarding the CDMO outlook for the second half. Anish-bhai, if I heard you correctly, based on the order book, we expect at least a flattish third quarter year over year, followed by a very strong fourth quarter and then even stronger in FY26. So I hope I got that correctly?

Question: Abhijit Akella - Kotak Securities - Analyst : Okay, got it. And both for CDMO for say fiscal '26 as well as specialty chemicals, given the kind of order visibility you have, would you be able to help us with some percentage growth guidance for [fiscal 26] --

Question: Abhijit Akella - Kotak Securities - Analyst : Okay. Then just on the INR540 crore project, how much -- the timeline seems to have slipped a little bit. We're not talking about November. It does seem to have slipped since -- it seriously embussed I think for December last year, so what exactly is the issue there? Is other technical problems or is it just market environment and then how much revenue can we expect from it in fiscal '25 given that we only have four or five months now left to do that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 1:00PM, NAFL.NS - Q2 2025 Navin Fluorine International Ltd Earnings Call

Question: Abhijit Akella - Kotak Securities - Analyst : Got it. I think just last question if I may before I get back into the queue, for the non dedicated portion of that contract, which I presume you will start supplying commercially next year? Then the margin profile be you know, materially sort of more dilutive compared to the dedicated portion. What sort of margin profile should we work with?

Question: Abhijit Akella - Kotak Securities - Analyst : Okay. Got it. The Surat INR30 crore CapEx, what would the revenue potential from that be? Just that the last thing from me?

Question: Ankur Periwal - Axis Capital - Analyst : First question on the customer feedback and your comment on the overall order book, especially for the specialty chemical business. This order book visibility, which is both from Q3, Q4 as well as for the next financial year. Is it largely led by the new products that we are doing with the global innovators or the older product portfolio and seeing some recovery in terms of the demand there?

Question: Ankur Periwal - Axis Capital - Analyst : Sure, Anish. And just last one, if I may. We did mention our focus to gain volume, bring in efficiency and sort of scale up the capacity utilization across all plants. And at the same time our guidance on the margin front, guidance or directionally, we are looking at a 25% sort of a margin outlook. Will the bridge over here, will it largely be because of the shift in product mix, revenue mix more skewed towards specialty and CDMO or there is some bit of pricing element uptake as well that we are building it in a broad assumption.

Question: Anubhav Sahu - Moneycontrol Research - Analyst : Hello. Yeah, thanks for the opportunity. I have a couple of questions. So one is on the European CDMO agreement which I remember back it's a three year supply agreement starting from calendar year '25. Which you also have mentioned that from Q4 '24 you would be starting supply of two intermediate. So this two intermediate which you mentioned are the additional one than the original three molecules we talked about. Does it change in terms of the number of molecules which you are catering to this point?

Question: Anubhav Sahu - Moneycontrol Research - Analyst : Okay. The second part of this is the timeline of the (inaudible) I mean, do you took this question earlier, but still just trying to understand that because they would be a dedicated facility with D&P for this client. So if the supply is going to be more back ended in something, how do you feel?

Question: Anubhav Sahu - Moneycontrol Research - Analyst : Okay. But the commercial one will start from Q4, this is what you are mentioning?

Question: Anubhav Sahu - Moneycontrol Research - Analyst : The commercial supply will start in Q4. Is that the case?

Question: Anubhav Sahu - Moneycontrol Research - Analyst : Okay. My last question is on the -- I'm just trying to understand the demand supply dynamics and specialty. So just trying to have a perspective from you that which is the bigger factor, whether it is a moderation in demand or China dumping or another reason or is there still a case for channel inventory rationalization? Of these three, which is the more concern factor for us right now?

Question: Rohit Nagraj - Centrum Broking - Analyst : Yeah. Thanks for the opportunity. So first question is one of the competitors announce that they are planning your manufacturing capacity in India. So what is our dialogue with Honeywell? As I think earlier, we were contemplating of the bottle making the capacity and maybe subsequently doubling the capacity for which we have kept this pay for Dahej. So what is the current status and what could be the roadmap for the same? Thank you.

Question: Rohit Nagraj - Centrum Broking - Analyst : Sure, that's helpful. And second question is you just mentioned that for the (inaudible) have the target of $100 million in FY27. So what could be the contours of the same given that FY25 we will be having close to say [$40 million-plus-minus] and we are contemplating almost 2.5x increase in next two years. Thank you.

Question: Keyur Pandya - ICICI Prudential - Analyst : Thank you for the opportunity. Two questions. First on the growth side. So FY25 now since this INR540 crore project is coming with some delay. So the growth in this specialty chemical would be driven by this INR190 crore CapEx MPP. And if that is so, then if you can just talk about number of molecules or what kind of utilization it is working at? And second, is it fair to assume that next year's growth would be largely driven by two key segments. I mean, one ramp up of this INR540 crore project. And second is CDMO.

Question: Keyur Pandya - ICICI Prudential - Analyst : So one is ramp up of this INR540 crore and second is CDMO for the next year --

Question: Keyur Pandya - ICICI Prudential - Analyst : Just one follow up. So on the current project. So the MPP of INR190 crore project, how would be the utilization? I think the revenue potential level is INR270 crore, INR280 crore. If you can just talk about the one number of molecules or the revenue run rate which are --

Question: Keyur Pandya - ICICI Prudential - Analyst : Noted. Just last question and second question. So on the CapEx side, CapEx for FY25 and '26 and the areas of CapEx. Thank you and all the best. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 1:00PM, NAFL.NS - Q2 2025 Navin Fluorine International Ltd Earnings Call

Question: Archit Joshi - B&K Securities - Analyst : Hi, sir. Thanks for the opportunity. I just have one question on CDMO while we have discussed a lot of computations around the $100 million target that we have for the business segment. What would be the significance and the road map that we expect for the US major and the UK major that we have been dealing with. How would be the nature of that business? Would it be campaign based? Or do we expect something significant, let's say two to three year time line?

Question: Archit Joshi - B&K Securities - Analyst : But would it be fair to assume that these will be some of the important or let's say significant ones while we are considering the $100 million number, given that --

Question: Nitesh Dhoot - Dolat Capital - Analyst : Yeah. Good evening. Thanks for the opportunity. Sorry if I'm repeating this question, but the revenue makes you know, move significantly in favor of India at 61% --

Question: Nitesh Dhoot - Dolat Capital - Analyst : So I was asking on the CDMO revenue mix that has moved significantly in favor of India at 61%. So while -- is it to do with the increase in the late-stage molecules and this is how it will be going forward?

Question: Nitesh Dhoot - Dolat Capital - Analyst : Just one more question that's on the finance cost. So what I think (technical difficulty) has increased by by over 20% year on year, but the interest cost has gone down by around [30%].

Question: Nitesh Dhoot - Dolat Capital - Analyst : That's clear, I mean, if I'm looking for Q2 to Q2.

Question: Nitesh Dhoot - Dolat Capital - Analyst : Yes.