Navin Fluorine International Ltd Q3 2025 Earnings Call Transcript

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

Question: Sanjesh Jain - ICIC Securities Limited - Analyst : Couple of them. First, on the Nectar project, we have started dispatches, but is the performance of the plant on the expected line in terms of yield, operation and all, and has it been running on the expected line there?

Question: Sanjesh Jain - ICIC Securities Limited - Analyst : I will put my questions first in that case. Question is on the CDMO, particularly on the Fermion product on the European and let's say what we have signed. It appears to be one of your competition has been reporting a very strong number, while for us, CDMO has been more like a flattish. Is that a lot of it will get captured from Q4? And from the registration perspective, now you said that you have started dispatching directly. Is it fair to assume that now with the registration probably completed soon, we should be scaling up. And when you say we have secured the order for CY25, what is the quantum of order that we are talking about? And the third question is on Specialty. Domestic continues to do quite well and export is dull. Is the classification difference or there is a delivery difference? How should one read about it? And the last question is on AHF. Once the AHF plant start, what is the savings that we could do as we are buying AHF now from the outside market? These are my questions.

Question: Sanjesh Jain - ICIC Securities Limited - Analyst : Yes, I wanted to congratulate you on that --

Question: Sanjesh Jain - ICIC Securities Limited - Analyst : And congratulations.

Question: Sanjesh Jain - ICIC Securities Limited - Analyst : Yes. Yes. We are now buying from the outside market, right? Once we --

Question: Sanjesh Jain - ICIC Securities Limited - Analyst : Like how much external sale are we targeting? Or what the quantum we were doing earlier?

Question: Sanjesh Jain - ICIC Securities Limited - Analyst : Got it. And just one last question before I come back in the queue.

Question: Sanjesh Jain - ICIC Securities Limited - Analyst : Anish sir, do you want to upgrade the margin guidance for next year now that we are already hitting '25.

Question: Sanjesh Jain - ICIC Securities Limited - Analyst : Fair enough. Fair enough. Best of luck for the coming quarters.

Question: Madhav Marda - Fidelity Investments - Analyst : My first question was on the Specialty Chemical business, especially the agro CDMO business, which we do. Could you just give us some qualitative thoughts in terms of -- I think you did sound confident about a good ramp-up in FY26 for the Spectrum business. So are we seeing the cycle kind of turning finally after almost six, seven quarters of weakness? That's my first question.

Question: Madhav Marda - Fidelity Investments - Analyst : So my second question was just on the R32. There has been obviously some pricing positive, which has been playing out in recent times, probably led by better prices from China. I just wanted to get a sense from your side in terms of calendar year '25, how do you all look at R32 pricing for us, domestic and export market?

Question: Madhav Marda - Fidelity Investments - Analyst : Got it. Just on the agro part, I think -- when we said that we readjusted pricing to kind of ensure that we get our volume and plus come in with the new launches. So is it fair to say that in quarter 3, this pricing adjustment, which you've taken is kind of already in the base or -- I mean each quarter, it will reflect, but like quarter 3, is that the pace for our base business already? Or there's still some adjustment pending?

Question: Sudarshan Padamanaban - GM Financial PMSP - Analyst : My first question is on the CDMO side. I mean, if I'm looking at -- you talked about the Fermion contract, but also the visibility over the two years with other products, A lot of these products are under patent and there is a huge runway of growth. I mean today, when I'm talking about (inaudible) contract itself, I mean, they are trying to expand the product for other applications in oncology as well. So from that side, I mean, beyond the $100 million, are we today in a spot where we have probably hit kind of a sweet spot with a few products hitting commercial in the late stage, which give visibility, not necessarily yet for two years, but say three, four, five years with the growth engine that we see. I just want to process on the cycle on that side.

Question: Sudarshan Padamanaban - GM Financial PMSP - Analyst : Sure. And with respect to the CapEx, I mean, now that we have CapEx for -- say the Phase 1, typically you're coming with INR160-odd crores that will come in -- is in the third quarter. I mean, do you think that probably with the scale up that you're seeing with the Fermion contract and other, I mean do we have enough land probably to go in for a brownfield or what is our thought process in terms of developing the capacity?

Question: Sudarshan Padamanaban - GM Financial PMSP - Analyst : Sure. And one final question before I join back the queue is on the specialty in the chemical side, the two molecules. I mean would there be -- I mean, these two molecules are they in the agri space, the pharma space. What is the kind of scale up that you see -- in the near term as well as from a longer-term perspective? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 1:00PM, NAFL.NS - Q3 2025 Navin Fluorine International Ltd Earnings Call

Question: Rohit Nagraj - Centrum Broking Limited - Analyst : First question is on the AHF capacity. Based on our understanding, how many years we will be able to fulfill the capacity at optimal level barring the external sales? So how much time will it take maybe four years, five years to completely utilize the capacity for captive consumption?

Question: Rohit Nagraj - Centrum Broking Limited - Analyst : Sure. The second question is in terms of the CapEx that we have planned. Now more or less, all the projects are actually on track. And if we were to move for the next leg of project, I mean, there is a cGMP Phase 2 CapEx, but beyond that, on the HPP front, are we looking to debottleneck the Honeywell project? Or is there an aspiration to go in for brownfield expansion for the HPP, which we had anticipated at some time ago.

Question: Ankur Periwal - Axis Captial Limited - Analyst : Congratulations on a good set of numbers. First question on the Specialty Chemicals side. You did mention that the INR540 crore CapEx, we will be ramping up this project -- the sales on this project gradually. Any timeline you can share when should we expect this business -- this product to reach its optimum revenue run rate?

Question: Ankur Periwal - Axis Captial Limited - Analyst : Sure. And similar run rate and time line for the other CapEx that we had commissioned INR235 crores one and INR125 crores.

Question: Ankur Periwal - Axis Captial Limited - Analyst : NPP for special and then I think --

Question: Ankur Periwal - Axis Captial Limited - Analyst : Great Anish. Just one bit on our gross margin expansion in this quarter. If I look at quarter-on-quarter, we are largely flattish, while in the initial comments, you did mention HPP did saw a pricing as well as volumetric growth. So is it that the full benefit of that pricing is going to slow down because that would have -- should have been more margin accretive? And second part here on our overheads, whether manpower or the OpEx. So pretty impressive control over there. Should we expect this run rate to continue?

Question: Ankur Periwal - Axis Captial Limited - Analyst : Right.

Question: Jignesh Kamani - Nippon Mutual Funds - Analyst : Congratulations for a good set of number. Just on the Specialty Chemicals side. So if you talk about first half, we reported close to around 30% kind of decline and in third quarter, we replaced close to 26% basis of the revenue growth. And at the same time, we commissioned the project Nectar also in November. So (inaudible) project Nectar our Specialty Chemicals grew in double digit, you can say?

Question: Jignesh Kamani - Nippon Mutual Funds - Analyst : Understood. So from where growth is coming because suddenly, growth has picked up drastically compared to first half? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 1:00PM, NAFL.NS - Q3 2025 Navin Fluorine International Ltd Earnings Call

Question: Jignesh Kamani - Nippon Mutual Funds - Analyst : Understood. Second thing on the Project Nectar. So anchor client was supposed to, you can say, pick up annually, close to around INR300 crore kind of, you can say, order from as you can see. And since this year, it will be close around four months (inaudible) we will be doing close to around INR80 crores from the anchor client this year, and maybe we will ramp up to close to INR300 crore kind of level next year. And adding to that, are we extended our product basket in the project Nectar, and you were in discussion with three to four more perspective clients. Any update on -- you can say there on whether we are able to supply the commercial molecule to them, meaning is it approval process have a stay?

Question: Jignesh Kamani - Nippon Mutual Funds - Analyst : Okay. And any update on the potential two or three customers apart from the anchor customer, which we are planning to help under dual cycle?

Question: Jignesh Kamani - Nippon Mutual Funds - Analyst : Understood. And my last question on AHF, since now capacity will commission shortly. I can say -- and we will be aiming have a 6% to 7% kind of (inaudible) like you said gradually (inaudible) on the purity level to supply to EV, do we have a technology and capability or -- or are we thinking in that line maybe not now, maybe two year down the line? Or we need to have a technology tie-up if you want to venture into high-purity AHF grade, which can be -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 1:00PM, NAFL.NS - Q3 2025 Navin Fluorine International Ltd Earnings Call

Question: Abhijith Akella - Kotak Secruities - Analyst : So Anish, the R32 expansion project that Nitin and you alluded to earlier on the call, for which your discussions are ongoing. Could you please give us some color around that? How large could the further expansion be what time lines, how much CapEx, et cetera?

Question: Abhijith Akella - Kotak Secruities - Analyst : Okay. Got it. The second one was just on the Specialty Chemicals disclosure about these two molecules being introduced in Q4 and Q1, the third bullet point on that slide. So are these part of the multipurpose plant or something separate?

Question: Abhijith Akella - Kotak Secruities - Analyst : Got it. So this is part of the INR270 crore revenue potential of that plan?

Question: Abhijith Akella - Kotak Secruities - Analyst : Understood. Understood. And final thing on the -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 1:00PM, NAFL.NS - Q3 2025 Navin Fluorine International Ltd Earnings Call

Question: Krishnachandra Parwani - JM Financial Institutional Secruities Limited - Analyst : Sir, congrats on very strong set of numbers. Just two questions from my side. Firstly, on this INR30 crores Surat CapEx. I just wanted to understand what the sales be gradual in FY26 and peak in FY27? How that is --

Question: Krishnachandra Parwani - JM Financial Institutional Secruities Limited - Analyst : Understood. And on the CDMO side in the presentation, you mentioned that U.S. major, the scale-up order received. So is it like a new contract that you are in the midst of signing or how is it, can you please share some details there?

Question: Krishnachandra Parwani - JM Financial Institutional Secruities Limited - Analyst : Okay. So you do have the capacity in order to, let's say, if you get the contracts, you have the capacity to execute it?

Question: Krishnachandra Parwani - JM Financial Institutional Secruities Limited - Analyst : Okay. Perfect.

Question: Jason Soans - IDBI Capital Markets & Secruities Ltd - Analyst : Just wanted to know, I mean, after some subdued quarters, we are again seeing some good recovery margins also recovering to a healthy 24% levels. I just wanted to know, are we looking at this agchem recovery? Is it sustainable? I mean what are the -- what is underneath it? Is it some demand improving, some channel restocking. Just wanted to know, could it be an inflection point for the chemical sector to recover from here on with CapEx intensity, et cetera, picking on from these levels? Or does the situation still remain quite difficult. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 1:00PM, NAFL.NS - Q3 2025 Navin Fluorine International Ltd Earnings Call

Question: Jason Soans - IDBI Capital Markets & Secruities Ltd - Analyst : Sure. And sir, I just wanted to also know that, I mean, you did give quite a detailed outlook for the CDMO business. Sometime back we were getting some good demand traction from biotech pharma as well. So just wanted to know in terms of demand from biotech, how is the outlook from that side from that vertical? And also just to add with that -- with this ambiguity in the Biosecure Act, does that impact us or regardless of that, we are on a good enough firm footing in terms of the CDMO business?

Question: Jason Soans - IDBI Capital Markets & Secruities Ltd - Analyst : Right.

Question: Nirav Jimudia - Anvil Research - Analyst : I have two questions. So first, on the AHF side. So like we are on the verge of commissioning the plant. If you can share your thoughts on the availability of fluoride like which is due controlled by a few countries, Mexico, China and Africa mostly. So some of the reports also said is that Chinese are faster depleting their resource for fluorspar given the kind of 6 million, 7 million tonnes of production they are seeing currently, given the kind of ecosystem they are building on. So from a sustainability point of view, how the company is placed in terms of the long-term availability and the contract for fluorspar? This is question number one. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 1:00PM, NAFL.NS - Q3 2025 Navin Fluorine International Ltd Earnings Call

Question: Nirav Jimudia - Anvil Research - Analyst : No, definitely, we have not heard -- some multiple suppliers on a long-term contract basis. But the -- this point is very be taken, and we also know that we need to go beyond these contracts also to secure our fluorspar supply. So if you look at our expansion of the new INR450 crore project of HF. So this particular plant, can use any fluorspar of any origin right from the Mexico, to China, to South Africa, to Vietnam, to Thailand,and particularly, we have spent some money on the table just to ensure that this single infrastructure can help us to play with the multiple fluorspar sources to secure our supplies of fluorspar. So definitely, although we have a very strong relationship with our existing fluoride partners. We've also kept a cushion to ensure in case of any crisis, in case of any supply disruptions, we have other sources from where we can easily use the fluorspar.

Question: Nirav Jimudia - Anvil Research - Analyst : Got it. Sir, second question is on the inorganic fluoride business. So your FY24 annual report says that we had a decent amount of volume growth in FY24, but the pricing was under pressure. And given the kind of market leadership in aluminum, potassium and the sodium fluoride, which we have been holding for quite a number of years. If we can hear your thoughts here in terms of how this business is shaping up, whether this incremental AHF is dedicated for some of the newer products in the inorganic floored side, some thoughts here.

Question: Nirav Jimudia - Anvil Research - Analyst : Got it. Sir, last clarification to Mr. Anish. So has the increased prices of sulfuric acid fully factored in, in Q3 or some bit of cost increases have to be felt in Q4 also?

Question: Nirav Jimudia - Anvil Research - Analyst : My apologies, sulfur.

Question: Keyur Pandya - ICICI Prudential Life Insurance - Analyst : Just one bookkeeping question is on the new plant. So the full depreciation interest and OpEx has been factored in this quarter or that would be next quarter? And any specific reason for say Q-on-Q fall in employee costs. That is first question. Second on --

Question: Keyur Pandya - ICICI Prudential Life Insurance - Analyst :

Question: Keyur Pandya - ICICI Prudential Life Insurance - Analyst : Second question is on cGMP3 capacity. So what is the peak revenue that we can do from cGMP3? Last I remember it was around, say, INR450 crores to INR500 crores. And that is the case -- I mean is it fair to assume that in the first year of operation itself, cGMP4 would achieve say INR350 crores kind of revenue in FY27? These two questions.

Question: Keyur Pandya - ICICI Prudential Life Insurance - Analyst : Okay. And on CDMO?

Question: Surya Patra - PhilipCapital India Pvt Ltd - Analyst : My first question is on the Specialty Chemical export domestic mix this quarter. It looks like that mix has reversed this quarter from the earlier trend, anything to read out of it, sir? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 1:00PM, NAFL.NS - Q3 2025 Navin Fluorine International Ltd Earnings Call

Question: Surya Patra - PhilipCapital India Pvt Ltd - Analyst : Okay. So going ahead, so it is a quarter-specific story or -- so nothing to read out of it or it can continue like this going ahead?

Question: Surya Patra - PhilipCapital India Pvt Ltd - Analyst : Okay. Just last question from my side is that this for the Nectar project. See, obviously, you have been consistently indicating that you have your order book for FY25. So you have started building up visibility for '26, sir, for this project?

Question: Surya Patra - PhilipCapital India Pvt Ltd - Analyst : Your voice is not audible.

Question: Surya Patra - PhilipCapital India Pvt Ltd - Analyst : Yes.

Question: Surya Patra - PhilipCapital India Pvt Ltd - Analyst : Okay. Okay. There is no demand in cost equation or cost concern for this project to be successfully or to see a kind of meaningful ramp up. There is nothing like that.