Ladies and gentlemen, good day and welcome to Navin Fluorine Q2 FY 2026 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch tone phone. I now hand the conference over to Ms. Pooja Swami from MUFG Investor Relations. Thank you. And over to you, Ma'am.
Am.
Thank you, Shruti. Good evening everyone and welcome to Q2.
H1 FY 2026 earnings conference call of Navin Fluorine International Limited. Today on the call we have with us Mr. Vishad Mafatlal, Chairman, Mr. Nitin Kulkarni, Managing Director, and Mr. AAnish Ganatra, Chief Financial Officer. This call may contain forward looking statements about the company which are completely based.
On beliefs, opinions, and expectations.
As of today, actual results may differ materially. These statements are not the guarantee of our future performance and involve risks and uncertainties that are difficult to predict.
A detailed safe harbor statement is given.
On page number two of the investor presentation of the company, which is uploaded on stock exchanges and on the company's website.
With this letter, I hand over the.
Call to Mr. Vishad Mafatlal for his opening remarks. Thank you. Over to you, sir.
Thank you.
Good evening ladies and gentlemen and welcome to Navin Fluorine's Q2 and H1 FY 2026 earnings call. I am joined today by our MD Mr. Nitin Kulkarni, our CFO Mr. AAnish Ganatra, and Ms. Payal Dawe from MUFG, in time, our Investor Relations advisor. I am pleased to begin by announcing that the board has decided to declare an interim dividend of INR 6.5 per share on a face value of INR 2 per share. At Navin Fluorine, we are committed to operating sustainably and responsibly. In line with our commitment, we have released the third sustainability report in the last quarter and the copy of the same can be downloaded from the website. The report aims to deliver a comprehensive assessment of Navin Fluorine's endeavors in fostering sustainable business practices and addressing the interests and expectations of our valued stakeholders.
Our focus on driving the key priorities, manufacturing excellence, controlling the controllables, and pursuit of growth objectives is yielding results and underpins the good performance for the quarter and the first half. All three of our business divisions reported good growth in Q2 FY 2026, setting a strong tone for the fiscal year ahead and beyond. With a strong order book in place, we remain optimistic about sustained momentum in the times to come. Later during the call, Nitin and AAnish will share the business and financial performance details. I am also happy to inform you that the Board of Directors in today's meeting have approved two capex. Both these capex are strategic in nature, one consolidating our position in Rev Gases and another demonstrating our ability to deepen partnership with global innovators. Contribution to the growth from these capex will further help us secure growth in FY 2027 and beyond.
In particular, the board approved number one, a capex of INR 236.5 crore for setting up additional HFC capacity equivalent up to 15,000 metric tons per annum of R32. Global R32 demand supply is in tight balance and likely to remain the way.
For the foreseeable future.
This HFC capacity directly addresses global needs for transitioning to low GWP commitments as also increasing RAC and blend demand in India and export markets. It is our strategic priority to play to our strengths in this business utilizing our available entitlement under Kigali Amendment to the Montreal Protocol, ensuring a balanced play across blends and R32, maximizing value for our shareholders. This asset is expected to generate a peak annual revenue of INR 600 -INR 825 crores on completion. The second debottlenecking of our MPP capacity is consistent with our strategy to sweat assets in the Specialty Chemicals vertical while deepening our strong relationships with global innovators participating in and contributing to their future growth. This capex will contribute to INR 140 -INR 160 crores per annum on completion. Both these capexes will be funded through internal accruals.
We continue to deepen our relationships with customers and suppliers while developing new relationships across different geographies and business verticals. Thank you once again for joining us today. With that, I would like to now hand over to Nitin to provide an update of our operating and business performance.
Good evening everyone and thank you for attending the call today. All three of our business verticals demonstrated good Q2 FY 2026, establishing a positive outlook for H2 FY 2026. With a healthy order book secured, we are confident about maintaining this momentum going forward. Our revenue for H1 rose by 42% to INR 1,484 crores, and for the quarter rose by 46% to INR 758 crores. Our EBITDA, PAT, and EPS for the H1 and for the quarter has more than doubled compared to the same period of FY 2025 on HPP business. During the second quarter of FY 2026, the HPP business achieved robust growth with a revenue crossing INR 400 crores, an increase of 38% year on year. The performance was driven by higher realization and volumes in both domestic as well as international markets. Our plants across Dahej and Surat are running at optimal capacity.
Our AHF project continues to advance steadily with mechanical trials underway. We are expecting to commission the same by quarter three of FY 2026. We also continue to progress development work on high purity electronic grade HF. Further, the Board of Directors today approved setting up of additional HFC equivalent up to 15,000 metric tons per annum of R32. We continue to believe that the global demand supply situation will further tighten over the near term considering the cuts under Kigali Amendment and increasing demand for blends and R32 in RAC application. This project is in line with our philosophy to nurture the product basket in a manner maximizing realization through a balance of committed optics and open positions. The project is expected to be commissioned by Q3 FY 2027 with a peak revenue potential of approximately INR 600 -INR 825 crores per annum on Specialty Chemicals business.
Our revenue in Specialty Chemicals business grew from INR 158 crores in quarter two FY 2025 to INR 220 crores in quarter two FY 2026, representing a growth of 39% year on year. Fluoro specialty plant commissioned in December 2024 has started contributing meaningfully from this quarter with the plant operating at optimum capacity with a strong order booking in hand through to calendar year 2026. We remain optimistic for H2 and beyond. The Chemours project to manufacture Opteon, a two phase immersion cooling fluid, is progressing well and is on track for completion by quarter one of FY 2027. Our strategy to deepen partnerships with global innovators and focusing on R&D is working well. We have received a firm order for calendar year 2026 from Global Innovator to manufacture a key intermediate for their novel AI. We have strong visibility for the above product from the innovator.
Accordingly, the Board has approved CapEx of INR 75 crore for debottlenecking of MPP capacity at Dahej, with a target commissioning date set for quarter three FY 2027 and peak revenue potential of approximately INR 140 to 160 crore per annum. We continue to build a robust pipeline with global agro and advanced material partners and are actively collaborating on new molecules both on CRO and scale-up manufacturing campaigns. This will help the future growth and support our aspiration to carve out a separate advanced material vertical on CDMO business. Revenue in our CDMO business has grown by 98% on year-on-year basis to INR 134 crore in quarter two FY 2026. The relationship with our European CDMO partner continues to grow stronger and we look forward to supplies commencing from January 2026 from our cGMP4 plant.
We are also pleased with the delivery of new late-stage molecule to another EU major during the quarter with expectation of a repeat order in calendar year 2026. We continue to develop our portfolio of late-stage innovator molecules and are happy to share that following our successful deliveries of pipeline products in recent quarters, the CDMO business has undergone an audit by three major innovators during the period. In conclusion, we remain focused on driving manufacturing excellence and customer-centric approach with our business while remaining committed to growth in a disciplined manner. On this note, I would like to hand over to AAnish to brief you on financial performance.
Thank you Nitin. Good evening everyone and a warm welcome to our earnings call. Let me take you through the financial performance for Q2 and H1 FY 2026. Looking at our quarterly performance, we reported revenues of INR 758 Q2 FY 2026, a 46% year-on-year growth driven by strong performance across all our businesses. Operating EBITDA stood at INR 246 crore, reporting a growth of 129% year-on-year. Operating EBITDA margin was 32.5% versus 20.7% in Q2.
Ladies and gentlemen, please stay connected. The management has been disconnected.
Sorry, guys. Apologies for that disruption. Hello.
Yes, sir. You're audible.
Okay. Apologies guys for that disruption. I'll probably go back to starting with the quarterly performance. We reported revenues of INR 758 Q2 FY 2026, a 46% year on year growth driven by strong performance across all our businesses. Operating EBITDA for the quarter stood at INR 246 crore, reporting a growth of 129% year on year. Operating EBITDA margin was 32.5% versus 20.7% in Q2 FY 2025. The margins have also grown sequentially as against 28.5% in Q1 FY 2026. Profit after tax grew over two times to INR 148 crore compared to INR 59 crore in Q2 FY 2025. Looking at our half yearly performance on a consolidated basis, we reported net operating revenues of INR 1,484 crore, a 42% increase over INR 1,042 crore in first half FY 2025. Operating EBITDA stood at INR 453 crore compared to INR 208 crore in the previous year with margins at 30.5% versus 19.9% last year.
Profit after tax for first half FY 2026 was INR 266 crore compared to INR 110 crore in H1 FY 2025, a growth of 141% year on year. We continue to maintain a disciplined financial framework while driving growth. As of 30th September, net debt-to-equity ratio stands at 0.09 times. Underscoring the strength of our balance sheet, working capital days is at 87 times sales, well within our financial frame. This concludes my remarks. We can now open the floor for questions.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The first question is from the line of Rohit Nagraj from B&K. Please proceed.
Thanks for the opportunity and congratulations on a stellar set of numbers. Just one question first. Given that the first half performance has been very strong both in terms of top line growth, EBITDA, margins, what are we looking at in terms of guidance for FY 2026, FY 2027 in terms of overall growth as well as margins and the capex for both these years? Thank you.
Thanks, Rohit, for the question. I mean again for FY 2026. I won't give you any forward guidance on FY 2027. You already have the bar numbers, etc., right? There's no point in me reiterating what you already are aware of. FY 2026, clearly we've set a run rate, and I think that run rate will align with the expectations that most of the market players have out of us. In terms of EBITDA numbers, the first half EBITDA number at 30.5% signals very strong traction of achieving closer to 30% for the full year as well. That's what we are striving to. We had originally given a guidance of 25% EBITDA, but we'd always said that there was more upside to it than downside. Where we stand now in the first half, given the performance, I think we're well on track to be between 28% - 30% for the year.
Right. I'm just capex for FY 2026 and if you have any number for FY 2027.
For FY 2026, I think we've done about INR 300 crore in the first half. In terms of cash outflow, it will be within the range of that INR 600, 700 crore for the year in terms of cash outflow, considering ongoing capex including the new ones that we've announced. In terms of going forward, obviously there will be a spinover of these capex that announced today into next year, but the frame remains for the next couple of years to about INR 1,000 crore. That's the frame, that's what my balance sheet and the strength will allow me to do. It will depend on the project as we execute the projects.
Right, right, perfect. Thanks a lot and all the rest.
Thank you. The next question is from the line of Ankur Periwal from Axis. Please proceed.
Yeah, hi there.
Thanks and congratulations for superb set of performance across the business segments. First question on the R32 expansion. If I do the working, you are presuming a pricing of, give and take, $4.5 - $6.5 for R32. Just wanted your thoughts given there is a queue of capacity expansion by you and other peers as well. How do you look at the pricing scenario both, let's say, in CY 2026 and probably from a medium term perspective.
All right, so let me thank you anyways. Let me sort of walk you through with the rationale supporting the R32 CapEx. Like we've always said before, we remain very, very constructive on the overall demand environment for R32. Not just directly for R32 but also driven by blends and export demand arising out of consumption cuts happening in the West and the growing demand in India as well.
The pricing environment, as we always said, we believe will remain firm. We're not going to second guess what the future price will be. If you look at the demand and supply factors, the demand tailwinds far outweigh the supply concerns that anyone may have. Therefore, there is a strong sense that the pricing environment will remain firm in the foreseeable future. We also think that given the dynamics of R32, additional supply, as you know, can only come from India. With this CapEx, what Navin is doing is essentially signaling that we are going to take our full entitlement under the quota and nurture this product for value to the shareholders. This will mean that we will do a balanced approach of committed offtakes and open positions so as to drive maximum realizations while ensuring that in the near term, any supply concerns do not remain.
The economics anyway, as you are aware from R32, always remain very attractive as everybody is aware of it. I won't reiterate that. I hope that answers your question, Ankur.
Yeah Anish, pretty much. Just one follow up, one on the contractual versus spot sales. Do we have any visibility or probably we are in discussion with the global players for a longer term supply arrangement for R32 and
we have already in place with strong arrangements already in place.
Okay, great. Secondly, from an overall margin outlook, you know, while you did mention 30% for this year, given the pricing that we are expecting this capex to generate as well as the ramp up in other businesses, will it be fair to say that even over a medium term probably a 30% EBITDA margin is what one should work with?
See, I just think that I don't want you to put words in my mouth, but essentially what you should look at, see the growth that we are demonstrating in this quarter is coming across the verticals. It's coming from volume expansion, it's coming from pricing, it's coming from product mix, it's coming from efficiencies, it's coming from a lot of drivers around it. You know, like I said before, there is more upside to that 25% than downside. We are certainly working to be closer to 30% in the midterm. That's what we are working to.
Okay, fair enough. That's helpful, Anish. Thank you and all the best.
Thank you. The next question is from the line of Sajal Kapoor from Antifragile Thinking. Please proceed.
Yeah, thanks for the opportunity, sir. What concrete non-milestones, you know, things such as master service agreement or core development rights or intellectual property participation do you think defines Navin Molecular progress towards becoming a more sort of integrated and strategic CDMO partner? I'm looking for certain intangibles or non-financial parameters if you can share.
I think the biggest intangible for Navin Molecular, and this is the nuance of that business, yes, Sajal, is that essentially you have to work very closely with global innovators and the philosophy is around on-time to quality delivery in these stages because these molecules and intermediates, while being a small component of the overall sort of value, they are very critical to delivery.
The other thing is that what we bring to the table is obviously our capabilities around complex chemistry, including in terms of, you know, whether we talk about our capacities, whether we talk about, you know, our R&D innovation to make sure that these quality, product quality is maintained to standard. The entire ecosystem has to be offered, you know, including how we protect the IP rights, how do we make sure that, you know, the customer's regulatory requirements are consistently met through a strong cGMP4 kind of compliance environment. It's a range of things over there, frankly. At the end of the day, what will work for us is our track record and, you know, how well we do sort of work with global partners and we are increasingly demonstrating.
Yeah, absolutely. Beautifully explained. Thank you for that.
I mean, that's the exact kind of details I was seeking, so thank you for that. My second and last question is how are the digital manufacturing initiatives, you know, like the advanced process control systems, the real-time quality monitoring, you know, all those digital initiatives, how are they translating into measurable margin improvement, yield enhancement, or any sort of, you know, faster batch release within the CDMO business? Thank you.
Globally, I mean, I wouldn't just kind of say this for CDMO but across our business verticals, the fact that we work with some of the largest players in the world, right, we have access to cutting-edge technology, BCS systems, etc., where, you know, our process information is monitored on a real-time basis in terms of performance and quality parameters, you know, so not only for us, but it is also accessible to our partners that we work with.
In CDMO particularly, you know, the work that we are doing with Permion, again, you know, it's a very close partnership, right? From how the asset is constructed to how it's commissioned to validation batches, to ongoing quality checks, etc.
Absolutely. Thank you so much for all those responses. I'll rejoin the queue. Thank you.
Thanks.
Thank you. The next question is from the line of Abhijit from Kotak Securities. Please proceed.
Good evening. Thank you so much. First, just with regard to R32, if you could please share your outlook for world demand growth for R32 over the next five years or so.
That would be really helpful.
If you look at the current scenario, right, current scenario, everybody knows R32 is in a very tight position both from a demand and supply point of view. If you look at the global demand for R32, I think it is growing ex China at about 5% CAGR. There is no reason to believe that that equation will go into imbalance. Everything that we see, it only means that the supply is going to get more and more constrained. I mean, come 2029, you're going to see a 10% cut come in China too, right? Everywhere else in the West, you're seeing the cuts coming in. Come 2032, you will start to see cuts happening in India too. Everything on supply is being constrained in some sense.
After 2026, you can't have new capacity coming up in India, and demand for R32 and cooling requirements from RAC, etc., are growing not only in India but elsewhere because of the transition to lower TWP consumption requirements as well.
No, thank you, that's really helpful. Just to clarify, you're probably at about 300,000 tonnes or 350,000 tonnes right now and growing at a 5% CAGR. Is that how we should think about it?
I think so, roughly ex China, I'm talking. Okay. Because Chinese capacity is largely expected to be consumed within China, you know, that's why you should look at it extra now.
Thank you. The other one I just had was on CDMO business. We've mentioned that we've, you know, got this from the European MSA. We've now got a strong outlook with three years of projection. If you could please just remind us again, what exactly is the projection from this project? I believe previously we had said $30 million peak. Is that what still stands at peak?
Has it been revised? I had indicated that, if you remember that when we talked of our $100 million target, we said 35%- 40% will come from this molecule, which I think has got more upward chances of bettering that because of obviously the growth in the end product. The peak demand is, I think, in 2029 or something. It's actually way out for that product. I had indicated what it would mean for us in FY 2027 and I think that's pretty much clear that's how it's going to shape up, you know.
Got it, sir. Thank you so much.
All the best.
Thank you. The next question is from the line of Vivek Rajamani from Morgan Stanley. Please proceed.
Hi sir. Thanks for the opportunity and congratulations on a fantastic set of numbers. Just on the state of the AGRI segment, we did see a good pickup in global volumes in the first half and now we are once again hearing some signs of stress. While you've mentioned that you have a strong outlook for H2, just wanted to get your insights on the kind of conversations that you're having with your customers and the trend of the recovery that you guys are seeing in the space. Thank you.
Thanks, Vivek. I think again in the adcam sector, one of the things that we've always said is that with everything that's going on in the global market, a closer relationship with the global innovators working to get a share of their future R&D pipeline is the right way to go about this, you know. I think that is yielding results. That's what's supporting the new MPP debottlenecking project. We've also always maintained that in the adcam sector we will be continuing to invest because we again remain very constructive of the long-term growth scenario in that business. We are going to be very disciplined. We are going to be extending our utilization and sweating the assets more and more, and that's exactly what you see being played out as we speak.
Sure sir, thanks for that. Just maybe one clarification on CDMO. I think in the PPT you've mentioned that supplies for the material order were concluded in this quarter and you're on for discussions. I just wanted to clarify, in the opening remarks did you mention that it would be likely in CDMO CY 2026?
Yes.
There is a repeat order for this particular molecule that will come in for CY 2026. It's expected to have its readout at the end of calendar year 2026, and then post that it can support, it has the potential of being another fermion, to be honest.
Sure, sir. Got it. Very, very clear. Thank you, and all the very best.
Thank you. The next question is from the line of Siddharth Gadekar from Equirus. Please proceed.
Hi sir.
Just coming back to the R32 part, can you just share how much of the volumes is contracted versus how much are we doing on spot basis, and how should we think about this in FY 2026?
Siddharth, thanks for your question, but unfortunately I will not be able to share anything beyond saying that we've taken a very balanced approach and actually the answer lies within that statement itself. I'm not going to be able to share exact quantities. We are taking this very measured manner, ensuring that, you know, as the capacities come up, there is a market that we are servicing, there's a customer that we are servicing, and that customer that we are servicing will also, the relationship will continue to grow deeper. This relationship is meant to extend beyond the midterm that the commitments are meant for. They're not short term relationships. There's a lot of commercial sensitivity. I would prefer not to talk about any further details on the contractual commitments and how much percentage involved.
Can you give any color in terms of how is the pricing difference versus a spot and the contracted volume?
No, any midterm contract, you've got to make a win-win solution. A win-win solution is always if it's as close to the market as it's possible. That's how we structure our contracts.
Okay.
Got it. Thank you.
Thank you. The next question is from the line of Sanjay Jain from ICICI Securities. Please proceed.
Good evening, sir.
Thanks.
Thanks for taking my questions.
A couple of them. First, on this Specialty Chemicals new plant of INR 75 crore, Nitin, you mentioned that there is a novel AI which we have won. Is this a dedicated capacity for novel AI, and is it a commercial product, or we will be starting along with the innovator.
Yeah, thanks very much with me. If you continue asking difficult questions, I'll have to drag him in, but this one I think I can take. On this, like we said, it's an MPP debottlenecking. As the name goes, it's a multipurpose plant. The idea is to sweat the asset, drive further realization, and seek greater value. We are going to keep maintaining flexibility, but at the same time, as this molecule blows up and goes bigger, at that stage we will be talking and possibly talking of a dedicated capex. Today, not. Also, it's an intermediate, not an AI, but it has the potential to get into an AI for us.
Got it. One question from my side on the margin, AAnish. This quarter it looks like it has.
Entirely come from an operating leverage because.
Our gross profit margin is broadly in.
The same line now.
Revenue has grown by 45%. Employee cost is down and operating cost has increased only by 12%.
Is there any one-off or?
It will be really helpful to understand what is translating such a strong operating leverage. Not even a logistic cost is showing up there. How should we read this?
I think over there again, you know, the best way to look at this is to see the bridge between your 20.7 of last year and a 32.5 of this year. You see the business has actually benefited significantly from volume growth, which was always the case. I mean, I think, I don't know if it was you or somebody else, but I'm sure we've had these questions when we've been talking of 25% guidance that people have said, you're going to have operating leverage. Where is it going to show? Now that it's showing, and it's showing across the vertical, about half of this EBITDA growth is coming because of volume. More than half, actually about three fourths of it is coming from volume.
We are seeing about any sort of, you know, there has obviously been some Forex tailwind as well, but that Forex tailwind has largely been absorbed by subsourcing costs. Got it. If you see the two sort of drivers here, about 80%-90% coming from the volume growth and the Forex sort of offsetting between sourcing and Forex gains. Obviously, you've got ref prices, which is why we are structuring our guidance to 28%-30% because of the fact that you may lose some Forex gains if Forex turns out. We are not going to speculate on the Forex value, but the underlying story of the business and the cost structure, the work that we've been doing to drive efficiency and manufacturing excellence, is going to continue.
Yeah, I think we are adding a lot of brownfield. That means this operating leverage should keep playing out, right AAnish?
Yeah, it should play out and it should continue playing out. At some point, you know, if you're going to translate this to a forward guidance, I wouldn't do that at this stage.
That's clear.
One follow up on the Nectar. We have started the second product as well. Are we confident that in CY 2026 the anchor customer will lift INR 300 crore, and what is the update on the remaining INR 300 crore of the capacity?
We are on track both for this year's numbers, about half of the par that we've always indicated. It will be slightly more than half, closer to the number you mentioned. There are firm orders for the customer to offtake that, and we are working towards that. There are a lot of tailwinds you will see in the coming quarters. On the Specialty Chemicals side in that front, the update on the open position, we have already made supplies for that too. Next year you will start to start seeing outcomes coming from that. Our target is to get to the full power by the end of FY 2027.
We are looking at a full utilization by December 2026.
No, by FY 2027.
That is March 2027. Got it.
Sorry, one last question on the, on.
The contract with the European thing.
Why is this approval taking almost six months? Because I think they're already supplying that. In that sense, shouldn't it have been slightly faster?
No. Are you referring to Fermion?
Yeah, Fermion . Correct, correct. The dedicated plant.
That is.
You know how the validation happens here, right.
Sanjay? This is for the new facility.
Yeah, for the right facility.
Correct.
It is faster. You must be aware that commissioning happened just one month back, and there are a certain number of batches which we need to make of each and every step. We need to validate the quality, the quantity we use. That is progressing. That is the reason if you see, we have made a comment that the commercial supplies from Jan because you're giving.
Some space for December holidays, etc. Right. January is when we expect to start.
This validation is for, you know, the new site and the new circuit, you know, in cGMP4. That's all.
No, no, that I'm aware. I thought it could have been slightly faster, but I agree to your point. It's.
They have to.
Sanjay, for us, it's about getting this right, frankly. It's having to drive the revenue and the top line in CDMO. We've got enough bandwidth and capacity. Fermion's orders are still being supplied and going as sort of, you know.
No, we are already now two new products. If you see the two more products where we are looking at a scale.
Up supply and then there is a Fermion.
I think if that client gets started, then it eases in terms of how.
We service the customer.
We are managing that. There is no concern on capacity constraints in CDMO line. We were able to manage that. That's not an issue. This is not a long timeline. As Nitin has said, any which way. Yeah,
right, right.
Are we looking at surpassing $100 million there?
I have given that as an aspirational target. I've also said very clearly that the absolute number doesn't matter even if I get closer to 100 or higher than 100. What matters is the scale that it takes us when you eat it, closer to that number as well. It's about making CDMO sizable and that's what is the message, you know, rather than a number. We are inching closer to that. Visibility is going to be very, very strong.
Super result. I have to tell that congratulations to the entire Navin team and best of.
Luck for the future quarter.
Thanks for answering all those questions.
Thanks.
Thanks.
Thank you. The next question is from the line of Arun Prasad from Avendis Park. Please proceed.
My first. I can't hear you.
I can't hear you at all other than Goblin Doodle.
Sorry.
Hopefully now it is better. I'll start from within. Thanks for the opportunity. My first question is on AHF.
I think even if the new.
Plant, new R32 plant running at full capacity, we will still have very large unutilized AHF utilization. In the past we spoke about using that to sell the external, to sell.
It to the external market.
How is the progress on that front, and when do we think that?
We can fully utilize?
Thanks, Arun, for that.
See Arun, as AAnish is always saying and we are mentioning in most of the calls, this is exactly the HF capacities which we are, which is coming up. This is actually the license to drain and as we said always that our approach is how we can do the value addition by utilizing this new HF capacity by going much higher into the manufacturing chain. We never said that we are going to utilize or run this plant on 100% capacities from day go. It is going to be gradual and we are of the opinion by 2029, 2030, we will hit both the capacities, will get utilized to the optimal level. In that direction we are already working with the various partners in the advanced materials in the HPP area as well as in this spectrum.
Of course you must be aware we have already mentioned that we are progressing quite well on the electronic grade HF. That is also going to consume some good percentage of the capacities at a much higher value realization. I think we should look at the HF investment and capacities more on a long-term basis. More strategic. Still I think with the existing capacities and upcoming capacities from FY 2026 itself, will be 50% up or more than that in capacity utilization.
Yeah, I mean a good point over there Arun, is that you know, I mean if you look at R32 today, you know, if us putting in capacity today is going to yield a greater realization per kg of HF, you know, the work that the team is doing on doing your electronic grade HF or in advanced materials and all of those are going to ultimately add more and more realization for every kg of HF. That is the game. It's not about selling the volume to start with and merchant sales. Those are temporary, short term things. You want to be in the market. That's very strategic investment.
Yeah, understood. Understood. One follow up on the R32, you.
Mentioned that you are balanced in terms of contract and spot typically. What is the contract duration? Is it a three months, six months thing, or pretty longer than that?
No, I've already indicated that. More midterm. It's not long term contracts, it's midterm contracts. When I talk midterm I'm talking about four to five years. This is a relationship we are going to nurture. It's not about a transactional activity.
Okay, understood. My second question is on the other expense part. If I look at it for last three to four quarters, the total other expense on absolute basis is.
More or less have remained at similar level.
Is there any, I understand other expense will have some variable portion and some fixed portion.
Are you benefiting anything on the variable?
Portion, say free cost?
We are driving a lot of efficiency in the system. We're driving a lot of efficiencies in the system. You know, whether it's about using our utilities more effectively, reducing effluent cost, that is what manufacturing excellence is about. Frankly, you will see some of that continue as well because that's our focus. You know, our focus is twofold: drive the variable down, keep the fixed as fixed. That is why I think Vishad Bhai talked about controlling the controllables. Yeah.
Would you say that on the yield part or the consumption part, the benefit is more from the price front or from the yield front within the other expense?
No. As I talked about the EBITDA bridge when I was explaining to Sanjay, about 90% of our underlying growth in the margins, EBITDA margins, is coming largely from volume growth. Yes, you also have some pricing tailwinds and you have forex tailwinds, which are offset through your sourcing cost.
Okay.
All right. AAnish Ganatra, I think thanks for the.
Opportunity and answering all questions.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Adityapal from MSA Capital Partners. Please proceed.
Hello.
Yes sir.
Thank you so much for the opportunity.
Congratulations to.
Great set of numbers for the Navin team.
Sir, I'm a bit new to the company, just started covering it recently. Wanted to have a quick understanding on our three segments that respect Chem, HPP.
The CDMO segment is entirely contractual.
If I were to understand what.
Would be the percentage of contractual revenue spectrum.
So.
I can take that question, but perhaps not appropriate for a call like this, which is a one hour call on the performance. Really appreciate you getting in touch with that IR, and we'll have a separate one on one or a separate meeting scheduled for this where we can talk you through the business and explain you, since as you rightly said, you just started tracking or just new to it. You can also look at our back, if that's okay. Don't mind me saying that.
No, because I was not getting the percentage. I read your previous contract.
I was not getting the percentage of revenues, that's why I asked this question.
Yeah, yeah, we can have that conversation offline. Not a problem.
All right, thank you so much.
Thank you. The next question is from the line of Krishan Parwani from JM Financial. Please proceed.
Yeah.
Hi sir.
Very good evening and congratulations on a very strong set of numbers. Two questions from my side. First on the ECKM intermediate, the new intermediate. Can you please highlight the expected peak market size of the agrochemical for which you'll be manufacturing this intermediate?
This AK Chem intermediate, now Krishan, is a very novel intermediate that gets applied to specific sort of crops. It's a herbicide and it's a very, very, very novel innovation with a huge sort of potential. Also a potential where this has got significant growth aspirations for the innovator too. We are participating in the innovator's growth aspiration, so to say. I would not be able to at this site at this point share the long-term views obviously because of commercial sensitivities.
No problem, sir. Secondly, on the R32 capacities, what kind of utilization rate are you planning?
I believe you said that you will be cautiously applying to the market so that there is no oversupply. What's the kind of utilization rate that you are planning for next year?
Like I said, Krishan, we are looking at a balanced approach of committed and open positions, and there is no oversupply in that sense. What I meant was this will be worked out for global and Indian markets in a balanced way such that we are able to operate the entire quota that we are allowed to manufacture. We have got very strong visibility to that based on arrangements we have in place here.
Okay, I got it. I didn't mean that there'll be an oversupply. I just was referring to more like your utilization rate for that. I understood. Once again, congratulations and best wishes for the coming quarters. Thank you.
Thanks, Krishan.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please submit your questions to two participants. The next question is on the line of Keyur from ICICI Prudential. Please proceed.
Thanks a lot. Congratulations on good results. Sir, just one question. The margin guidance that you are giving for this year. Now considering that many of the projects probably will ramp up in FY 2027, do we assume similar margins or optimal margins? How should we think for FY 2027?
Yeah, I think we can visit in the coming quarters on that. Be patient. Like I said, we are working very hard to maximize this value for shareholders. You can see in the last two quarters I've already given an indication of what FY 2026 would look like and what we are working to as we get nearer that time, you know, things will become more and more clear and more and more cemented.
Fair enough. Thanks a lot.
All the best.
Thank you. The next question is from the line of Madhav from Fidelity. Please proceed.
Yeah, I just wanted to understand. On the CRAMS business, we had a fairly sharp ramp up at least on a year-over-year basis. You did indicate that there was one large supply which got completed. I just wanted to understand any color that you can share in terms of the quantum of that supply. Like some of this business can be lumpy, not just for you but for the players as well. I just wanted to understand how lumpy that supply was for us.
Mahadav, thanks. I mean the lumpiness, I think, and I'm going to say this is going to be a thing of the past for us. You can see that in the consecutive two quarters that we've done, and we don't think you will see the lumpiness in this particular molecule. Like I've said, you are going to see that we've done one delivery now, and there will be another repeat order coming in CY 2020 for deliveries in CY 2026. There is a readout expected at the end of December. Fingers crossed that turns up, and that will blow up as well.
After that
it does in December 2026.
Yes.
Okay.
That's slightly sooner than that. I'm just giving you December; it's probably November or whatever, but it is in that kind of window.
Okay, understood. The incremental 15,000 ton R32 capacity which we are putting up, any broad sense in terms of how much of that gets sold in domestic versus export markets? Will exports be a larger part of the growth driver because, like you said, blends etc. is picking up in the western markets as well? Some sense.
I think we have a very unique proposition here because we are seeing today as we are selling our current capacities that there is enough appetite in the global market to balance any requirement as also Indian market continues to grow. Frankly, a percentage distribution doesn't matter. It will probably be in the ratio of what we are looking at now as well, consistent with what everybody is seeing across the industry.
Okay. It's going to be the mix of domestic and export. Both should scale up.
There will be a mix. Yeah, there will be a mix of exports.
Okay, thank you.
Thank you.
Just to add, you know, I mean like I've always said, this is a product we're going to nurture. Right. We are going to balance the placement of the product in such a way the margins aren't compromised. Sorry, go on. Yeah, we can go to the next tab.
Thank you. The next question is from the line of Surya Narayan Patra from PhillipCapital. Please proceed.
Yeah, thanks for the opportunity. Congrats for the great set of numbers. My first question is on the CDMO side. In the opening remark, you have mentioned about three new customers auditing your plant. Could you give some sense of the nature of the client? Although you mentioned that it is innovative, is it large pharma kind of or nature of?
Large pharma.
Okay. Any product indication or anything that.
We generally get, or it will not be.
No, I wouldn't prefer during that year.
Okay, fine. About the CDMO also, in fact in the first half we have seen a robust growth of around 50% on a YoY basis. We have also seen that fourth quarter of last year, second half was really robust again. Considering all that, how should one think in terms of the overall growth momentum for the CDMO for this year and how can that momentum continue? You are also mentioning about your FY 2027, your order book is kind of a visibility that is there because of the purchase orders. Could you give some sense about the trajectory in terms of growth and all that.
We are striving to do second half that's better than first half, and that is then what will set the trajectory to get to the numbers we talked about. The order book is strong, so hopefully that should be what we do. Yeah, I mean.
Okay.
Okay.
Did you face any kind of a tariff impact so far in any of the, for any of your business?
Nil to marginal. On a scale of 0- 10, I would say probably 2- 3.
Okay. Any update on the Honeywell things? We are anyway in terms of extending or expanding the relationship.
Those conversations are always there. With all our strategic customers, we don't make a one product conversation. There is a basket of products that you talk about, but honestly, nothing is matured yet for me to come to you and say yes, there's a capex or there is an investment. These discussions are ongoing, as with others too.
Sure, sure. Yeah. Wish you all the best. Thank you. Thanks a lot.
Thank you. Due to time constraints, that was the last question. I now hand the conference over to Mr. AAnish Ganatra for closing comments.
Thanks everybody for making to the call. Before we conclude, I just want to summarize the key takeaways from the call. Hopefully you've captured from what Vishad Mafatlal shared, Nitin Kulkarni has shared and through our conversations. This was a very strong performance for Navin Fluorine for the quarter and first half. The operating leverage is playing out quite nicely. The balance sheet continues to remain strong and we are within the framework and the financial framework that we set. The value accretive capexes which have now been announced are going to start accelerating or showing growth beyond FY 2027, which is what we are always committed to. We continue to make progress across all our verticals on the strategy front, with a particular focus on R&D and product pipeline.
The idea is ultimately that this will help propel growth and also allow us to meet our aspiration of carving out advanced materials. With a strong order book for CDMO vertical, we are continuing to inch towards our $100 million top line aspiration. I just wanted to make sure that everybody captured those key messages. Once again, thank you for joining us today evening and have a great evening. Thank you again. Bye.
Thank you. On behalf of Navin Fluorine International Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.