Ladies and gentlemen, good day and welcome to the Navin Fluorine International Limited conference call hosted by Signis Partners. 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 touchtone phone. Today on the call, we have with us Mr. Vishad Mafatlal, Chairman, Mr. Nitin Kulkarni, Managing Director, and Mr. Anish Ganatra, Chief Financial Officer. This call will contain forward-looking statements about the company, which are completely based on the beliefs, opinion, and expectation of today's call. Actual results may differ materially. These statements are not the guarantee of future performance and involve risk 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 exchange and on the company's website with it. With this, I now hand the conference over to Mr. Vishad Mafatlal for his opening remarks. Thank you, and over to you, sir.
Navin Fluorine's Q2 and H1 FY 2027 earnings conference call. Joining me today are our Managing Director, Mr. Nitin Kulkarni, our Chief Financial Officer, Mr. Anish Ganatra, and Ms. Payal Dave from Signis Partners, our investor relations advisor. Before we proceed, I would like to take this opportunity to thank MUFG Intime team for supporting us in managing our investor relation activities during the last five years. We appreciate their contribution and assistance extended to us during this period. We have appointed Signis Partners as our investor relations consultant. We look forward to working with them as we continue to strengthen our engagement with the investor community. Coming to our performance, in the first half of FY 2027, our PAT crossed INR 500 crores with an EPS of INR 100.
This result reflects our continued focus on strengthening our business, building capabilities for the future, and advancing our strategic priorities through disciplined execution.
As we navigate the evolving business environment, our priority remains to strengthen our business fundamentals and deliver sustainable growth across all verticals. At the same time, the safety, health, and well-being of our employees remain paramount, and we continue to uphold high standards of safety and operational excellence across our facilities. I am also pleased to share that the board has declared an interim dividend of INR 8 per equity share with a face value of INR 2 per share. In our HPP business, we continue to strengthen long-term customer relationships and commercial partnerships. In this context, I would like to highlight an important development announced recently. The tenure of our existing HFO supply contract with Solstice Advanced Materials has been extended by four years until December 2032, and will have an additional revenue potential of approximately US dollar 180 million.
I thank the management at Solstice for their continued trust in our capabilities and look forward to deepening our relationships with them. We are also making steady progress in developing Advanced Materials as a potential growth platform over the longer term. Focusing on specialized applications across areas such as data centers, electronics, semiconductors, and defense, leveraging our expertise in fluorination chemistry and R&D capability. We are confident this business will create additional growth opportunities for us. Let me now provide a brief update on our ongoing capex programs. During the quarter, we commissioned the debottlenecking of our MPP capacity at Dahej. Our HFC capacity expansion is progressing as planned and remains on track for commissioning shortly. The Chemours project, which will enable us to participate in the emerging advanced cooling market, is also progressing towards commissioning in Q3 FY 2027.
Our investment in advanced material adoption capacity is progressing as per schedule and is expected to commission by Q2 FY 2028. In our CDMO business, phase two of the cGMP4 facility, involving a capex of approximately INR 125 crore, is progressing as planned and is expected to become operational by the end of Q4 FY 2027. The TDF project to develop an indigenous specialty material with DRDO is progressing well as per schedule. While we deliver sustainable results and continue to invest in growth projects, the leadership and I are actively looking at meaningful investments in cutting-edge technologies that drive value for all our customers and ourselves. This includes enhancing the integration of digital technologies across our businesses, leveraging AI to strengthen our research capabilities and optimize our processes.
We are also investing in renewable energy across plants, which will meet more than 60% of our energy requirements through renewable resources.
As we progress to the next phase of growth, we recognize the importance of continuously strengthening our organizational capabilities and investing in our people.
We remain committed to developing our existing talent, enhancing critical skill sets, and building the capabilities required to support our evolving business needs and long-term growth ambitions. I would like to also thank our customers, employees, partners, and all stakeholders for their continued trust and support, and we look forward to building on this foundation in the years ahead. With that, I wish you and your families a very happy Diwali and a prosperous new year in advance. I will now hand over to Nitin to take through our business and operating performance.
Thank you, Vishad bhai. Good evening, everyone, and thank you for attending the call today. We have delivered strong set of results in what is otherwise a very volatile geopolitical environment. In this regard, I would like to recognize the efforts of our leadership and their teams for their commitment, agility, and effectiveness in navigating these challenging times. All our business verticals witnessed a strong performance during the quarter, supported by healthy growth momentum. In our HPP business, we continued to deliver healthy revenue growth during the quarter, supported by higher volumes and improved realization. The pricing environment for HFC remains firm, with realization improved on a sequential basis. We are also witnessing encouraging customer interest in our upcoming capacities, providing good visibility for the business going forward.
Our new HF facility has witnessed an improvement in utilization, contributing to our growth momentum. R32 capex is progressing as planned and remains on track for commissioning shortly. An extension of contract from Solstice Advanced Materials provides potential visibility beyond FY 2028, and would like to extend my appreciation to the partners and teams involved. With our established customer relationships, growing portfolio of products, and expanding geographical footprint, we are well-positioned to secure the opportunities in this business vertical. In the specialty chemical business, we continue to see healthy growth momentum supported by strong order visibility for the second half of FY 2027 and beyond. Our product pipeline continues to expand across both existing and new molecules, strengthening our portfolio of differentiated chemistries, and supporting our growth prospects. During the quarter, we commissioned the debottlenecking of our MPP capacity at Dahej in September 2026, further enhancing our production capabilities.
Moving on to CDMO business, we continue to see strong momentum with our FY 2027 target well within reach, supported by encouraging business developments and healthy product pipeline. I am pleased to mention few of our existing molecules have seen positive developments in their end use with favorable results of the trials. Our engagement with leading European CDMO major continues to deepen, driven by increasing demand for an existing molecule and expanding role in the customer supply chain. From a strategic perspective in this vertical, we continue to focus on building a balanced portfolio of late-stage and commercial molecules, complemented by early-stage programs. We are also expanding our presence across promising therapeutics areas, including oncology, cardiovascular, neurology, and animal health through engagements with global innovators. With this, I hand over the call to Anish for sharing the financial highlights.
Thank you, Nitin. Good evening, everyone, and a warm welcome to the earnings conference call. Moving on to the financial performance for Q2 and first half FY 2027, let me begin with the key highlights for the quarter. On a consolidated basis, operating revenue for the quarter stood at INR 1,191 crore, registering a year-on-year growth of 57%. Operating EBITDA grew by 66% year-on-year to INR 407 crore, with margins expanding to 34.2%. Operating PBT increased by 87% to INR 336 crore, while profit after tax rose by 81% to INR 269 crore, reflecting the strong growth in both revenue and profitability. Turning to the half-year performance, operating revenue for first half FY 2027 increased by 51% to INR 2,236 crore, supported by broad-based momentum across HPP, specialty chemicals, and CDMO businesses. Operating EBITDA grew by 69% to INR 765 crore, with margins expanding by 367 basis points to 34.2%.
Operating PBT grew by 93% year-on-year to INR 619 crore, compared with INR 320 crore in first half FY 2026. Profit after tax also increased to INR 513 crore, a growth of 93% year-over-year. Our EPS stood at INR 100, and our net operating working capital days stood at 70 days, which is within our financial framework. With that, we can now open the floor for questions and answers.
Thank you so much, sir. Ladies and gentlemen, we will now begin with 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. Our first question comes from the line of Sanjesh Jain with ICICI Securities. Please go ahead.
Yeah, good evening. Thanks for taking my questions. My first question is on the revenue bridge. All the three segments sequentially has grown impressively. Can you help us understand what has led to this sequential growth? Because prices in refgas has largely been stable in the HPP, and specialty, I thought we were, except Corteva, most of the plants were running full. And in CDMO, I think there is more offtake in the European Union. How much more can we do there? Can you help us understand all of the three segments, what is driving the growth, and from here on, what growth driver from the Q2 base?
All right. Thanks, Sanjesh. Good evening to you. I mean
Good evening, sir.
Good evening. If you look at Q1 to Q2, right? That is what you are referring to.
Correct.
I mean, if you look at it, the HPP business has largely grown both from a benefit of pricing advantage in the refgas business. There has been movement on prices. I mean, this is the danger of relying on averages, right? I mean, averages do not tell you what we kind of. Our teams managed to place the product at better pricing. We have also had good volumes because, like we have said before, our HF plant has come into play. So volumes on HF are pretty good. That is helping. Also, Q-on-Q, we have had growth in the Orchid business too, the HFO business of Solstice. So that has also helped. Specialty, I mean, again, I refer back to my commentary, I think probably in the last two, three quarters, where we have consistently said that this business will become more like a INR 350 crore business.
Now, again, our philosophy in this business, given the global dynamics, is to extract more and more juice from the current assets. Our MPP plants, and the operational efficiency that we are doing allows us to do more campaigns in the same plants, because of the way we are mapping the products and minimizing the steps. Also, our teams in R&D and innovation are helping us do that. So that is helping. I mean, in fact, if you see specialty MPP-1, MPP-2, we will have far exceeded the par by the end of this year.
Okay.
In this environment, our teams are able to deliver that. CDMO, there is growth both from the base business from Fermion, as well as some encouraging new qualification campaigns that we have run too. That is helping the CDMO business. But essentially, this is kind of the growth explaining from the sequential from quarter to quarter. Hereon, if you look going forward, right?
Correct.
The growth will come. We recently commissioned the debottlenecking at the end of September. You should start to see growth coming in from that in the specialty, even beyond where we are today, because that has not been factored in the numbers. You will also see growth coming in HPP from the new R32 commission plant that is being commissioned shortly. Of course, it will ramp up towards the end of this quarter, and we will start to see some incremental sort of growth coming in this quarter, but then full ramp up possibly in the next quarter, yeah?
Correct.
CDMO, of course, like we said, and I think Vishad bhai and Nitin both mentioned, we are at the striking distance of our $ 100 million target in terms of order book visibility. There will be growth for that business too by the end of this year. Beyond that, again, we have already announced the phase two capex that will start delivering growth also in that vertical.
That is great, Anish bhai. Super explanation. I think what has impressed more in this quarter is that we were able to maintain the gross profit despite a very inflationary environment. What is helping us to hold on to gross profit while all our peers have struggled there?
Again, if you look at our EBITDA bridges, in terms of the percentage bridges, I am telling you both from a year-on-year and a quarter-on-quarter perspective.
Okay.
We are able to, between the foreign tailwind and the price actions, pricing actions we are taking, largely we are able to offset the sourcing impacts.
Okay.
Also, what is happening for us is operating leverage is playing in. Plus, there is a lot of effort being done on operating efficiency, which is also helping capture and protect the EBITDA.
Okay.
As we go forward, this is something, and that is exactly the reason why Nitin Kulkarni brought out in his speech, the fact that even in this environment, the commitment of the teams, the agility of the teams is helping us navigate. That is something that is going to Sorry, there is some disturbance there.
No, sir. I am there. Sorry.
Okay. No, exactly. I mean, we will all have to remain committed and agile to respond to the geopolitical challenges, because I do not think we are out of the woods yet, in terms of the geopolitics.
Got it. One last question before I join back in the queue. The contract extension, I thought we had a higher headroom for the volume, but the implied contract for next four years implies a $45 million run rate annually versus a $58 million run rate we had. What could be missing in this?
No. The way you should look at these, there are two things happening here, right? One is the fact that the extension gives us a longer visibility and adds in about close to $ 180 million potential for revenue over the next four years with the same assets. It is definitely going to add in leverage, in terms of where we are. Second, the pricing mechanism is always a pass-through mechanism in these contracts, right? That is something to bear in mind, that as we go from now here on, how the pricing mechanism works, if you recovered your capex, there will be a different answer to it. So, there is a lot to the commercial contract in the way they get structured that you cannot make a simplistic notion on the average rate.
In fact, if anything, this contract is going to guarantee us larger volumes than what we had before.
Got it, Anish bhai. I think these are my questions. Thanks for answering all the questions, and best of luck for the coming quarter, and happy Diwali in advance to the entire Navin team.
Same to you, Sanjesh.
Thank you. Our next question comes from the line of Rohit Nagraj with 360 ONE Capital. Please go ahead.
Yeah. Thanks for the opportunity, and congrats on, again, a good set of numbers. First one on the clarification on the HFO contract. If we look at for the last seven years, the average run rate has been about $60-odd million, but for next four years, it indicates $45 million. Just want a clarification in terms of whether the revenue run rate will moderate going, I mean, beyond FY 2029. Second question allied to that, our own HFO commercialization, will that get delayed because now we will be supplying to Honeywell beyond 2030? Thank you.
No. I will take the second one first. If you think of this, Rohit, at the end of the day, we will not get into the same application. You and I both know there are 40 different varieties of HFOs, yeah? As long as we are sort of not within conflicting of the contract, there is nothing to stop us to do that, yeah? Therefore, I do not think that means anything on whatever else we are doing on the other HFOs, yeah? We have also said before that as we do the other HFOs, we will be looking both at partnership models as well as product models, yeah? Depending on whatever suits best for us.
In terms of your question on the contract and the average rate, like I was just telling Sanjesh, you cannot look at this in a very simplistic way, dividing by the number of years, because frankly, if you had a certain pricing in mind, which you set in 2022 for the current contract, or 2020 actually for the current contract, that pricing environment is different to what we are today, what will be in 2028. The way to look at this is that on a same asset base, you are going to extend both the volumes, the revenues, and also the period.
This was a seven year contract, this now becomes an 11-year contract. In other words, whenever we talk of our growth between now to FY 2030, and there was this question, what happens to the Honeywell contract after 2028, this particular thing actually addresses that the base is protected.
Right. Perfect. Second question on Chemours. We have seen some delay, and obviously there have been challenges in terms of geopolitical and other things. Just one clarification here that whether because of the delay in commissioning of the project, the qualification cycle also will get delayed, or since we have been supplying the material in the interim, that qualification cycle will not have material impact because of the commissioning of this project? Thank you.
No. So, again, we have said this before, Rohit. When you look at this project, we have been working with Chemours to co-develop this. The project itself, which started from a tech pack and developing in the lab to the pilot scale, and to supplying them currently to the initial capacity, the process routes are different. So, one, we are actually, the delay is more attributable to looking at the right process to go into the initial capacity, which then allows us to accelerate the larger capacity should there be demand. In fact, the delay is a conscious choice rather than anything else between the partners. And this is evidenced by the fact that as we are coming to commission that asset, we already have orders in place coming in for the future quarters, yeah?
Okay. Thanks a lot, and all the best, and Diwali wishes to the entire team. Thank you.
Thanks. Same to you, Rohit.
Thank you. Our next question comes from the line of Ankur Periwal with Axis Capital. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity, and congratulations on a strong set of numbers. First question on the CDMO side. With phase II of the cGMP4 coming in, will it be largely used or consumed for Fermion contract itself, or there could be newer molecules also which will be driving growth here?
CGMP for phase I and phase II, Ankur, are both dedicated plants to Fermion. This is going to be completely dedicated plants.
Sure. The follow-up question to that will be that, since you mentioned there are three molecules that we are working on, and we are at advanced stage for one of them, if I got that right, what are the timelines one should look at for the next phase of expansion here for the newer molecules?
Again, you have to look at this that when we started to do the phase II GMP-4 plant, we were already doing the warehouse all the way up to phase VI. We are doing ETP all the way up to phase V, right? We can actually go to CGMP 5 pretty quickly with the infra there, in terms of the utility, et cetera. The developments that you are referring to are actually positive on two molecules. If you picked it up, one of the molecules has already received approval in China, and that is on fast track on FDA approval in the U.S. market. That will sort of probably come in. Again, the other molecule is more about the potential expansion, label expansion of darolutamide itself, and that again has promising concepts on value. We are very quick.
The moment we see and sense the utilization of our cGMP plants coming to 70%-80%, we will be triggering off phase V. There is absolutely no doubt in our mind on that. I have said this before as well, come to INR 100 million number, we will sort of be starting to knocking that door very soon, frankly.
Sure, Anish. That is very helpful. Just second bit on the specialty chemical side, with Nectar looking to be ramped up probably, let us say, within this financial year, fully utilization in terms of the peak revenue, how do you see that revenue piece picking up? Chemours is one to ramp that up, but apart from Chemours and MPP debottlenecking, any other projects that we are working on which will require separate dedicated facilities?
We have got, like I said in my last commentary, Ankur, we have got 5 molecules, new molecules that we were working on. Some of the numbers that you see, the growth that you see, which Sanjesh was asking, is actually out of those molecules as well. There are campaign orders for those molecules going all the way until the end of this year and beyond as well. There will be growth coming from there. For Nectar, we had always clarified that FY 2027, we will be somewhere around 60%-65% of the par, and the balance par will come into FY 2028. So, that is the ramp-up sort of around the specialty business. INR 350 as a run rate, we had said about last three quarters. So, that is what you are seeing play out as well. It will go up because of the reasons we talked before as well.
Yeah. Sure. Great, sir. That is it from my side. Thank you, and wishing you all a very happy Diwali. Thanks.
Thanks. Same to you, Ankur.
Thank you. Our next question comes from the line of Archit Joshi with Nuvama Wealth Management . Please go ahead.
Hi, good evening, everybody. Thanks a lot for the opportunity. Just one question. Any development on the DRDO contract, any ramp or economics that we have been coming across, and you can share anything on that account?
Hi, Archit. The DRDO, again, we are working to the schedule as prescribed with the defense. That is going on track with them. Again, like we shared, this molecule has dual use. As and when the product is developed, we will be accelerating the application in the pharma phase sooner than what time the defense takes, because that will take time from the defense side in terms of when they get comfortable, right, in terms of the qualification, et cetera. Again, you know the potential market over there. Even at 50%, just the Indian market is roughly about INR 400 crore in the pharma side.
Sure, sir. Just one small bit again on, so the HF prices also have firmed up quite a lot in the entire onslaught within the world. Have you been able to benefit since we have also commissioned the capacity?
I think, again, yeah, pricing, as we know, is an equation of cost, right? I mean, when you look at how HF prices have gone up, you should also look at how prices for sulfur, gas, right? A lot of raw materials has gone up, right? Fluorspar is also going up. So, I mean, frankly, I think in this sort of an environment, a 34% EBITDA is really a solid EBITDA that cannot come only from pricing. That has to continuously come from the efficiencies and the improvements we drive within the organization. That is going to be our mantra.
Right, sir. Of course. Get that point. That would be all from me. Wishing a very happy Diwali. Thank you.
Thanks. Same to you.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for the closing remarks. Thank you, and over to you. Sorry. I am so sorry. I am so sorry. Ladies and gentlemen, anyone who wishes to ask a question may press star and one. Anyone who wishes to ask a question may press star and one. Next question comes from the line of Arun Prasad with Avendus Spark. Please go ahead.
Yeah. Good evening, everyone. Thanks for the opportunity. Anish bhai, my first question is that, I think, first of all, it is impressive that we have reached the CDMO targets of $1 00 million on a 100 basis much earlier than we initially said. But following up that, am I right if I assume that for including the phase II , the new target will be somewhere close to INR 1,200 to 1,300 crores?
Arun, again, we have always been saying that we will do $ 100 million by FY 2027. It is not early, it is actually on time. We have been saying this for some time now. We have also said that cGMP4 phase two, when it phase one and phase two put together, the peak annual revenue potential is close to 3x of the capital or about INR 900 to 1,000 crore by FY 2028, FY 2029, if I am not mistaken. That is also on track. The molecules that we talked about, the label expansion for darolutamide, the approval for the other molecule in the China jurisdiction, which then gives a greater confidence of approval in the other jurisdictions, is all positive development. So, envisaging a growth beyond FY 2027 in the numbers that you talked about is not sort of unimaginable.
Understood, sir. Second, Anish bhai, I think, given the growth that we are seeing in all the three segments, inevitably we are going to have a post-tax OCF of more than INR 1,200 crore, INR 1,300 crore in the steady state. But so far, we have not announced, obviously something will be in the plans, but how should we see your capex? Will the capex will continue at the current rate, or we will have a lot of surplus free cash flow which we will be distributing to the shareholders? How should we think in this capital allocation perspective?
Yeah. Like I've said before, our capex frame will be in the INR 700 to 1,000 crore every year. INR 700 crore this year is what we are looking at, given where we are. I think the first half captures something in the range of INR 300 crore, INR 310 crore. We are on track for what we are saying we would do this year on the lower end of that range. We are working on several projects, and as these projects kind of mature through our stage gates, you will see capex being announced. We're very conscious of the fact that with the capexes we have in place, our growth to FY 2027 is pretty much baked in. Some part, of course, goes to 2029, like the cGMP4 that I was talking about.
But there will be other projects that will come in to capture the growth before, and our portfolio is looking quite healthy and rich on the pipeline, yeah?
Understood, sir. Sir, one more clarification on the HFO contract extension. It's very clear that from what you said is that we'll have some reduction in the gross margin at a portfolio level, but should we also extend, I mean, incremental volume, should it result in a margin accretion at EBITDA level, sir?
Incremental, I mean, when we are growing at the rate of 20%, 25% annually, our costs are not going to grow at that rate. The question is, what will be the EBITDA in the future? We're not going to change the guidance from 30%, because frankly, I'll be the first one, future, long term, we're not going to change the guidance from 30%. I'm not talking of the year, I'm talking long term, right? The reason for that is that I will not sit here and let you believe that I have full knowledge of the future. In fact, if at all, our cognitive ability does not allow us to predict the numbers for five years and six years, yeah, on EBITDA margins. The geopolitics are massively volatile, as you all know, so we'll figure that out.
For this year itself, for FY 2027, just to be clear, we are going to be working on the margins that you see for the first half, in the same sort of range for the year. That is what we will be working towards.
Understood, sir. Sir, I also heard that you spoke about the HF placement, if I heard it rightly. That means are we selling it in the domestic market also, the HF, from the HF plant?
Sorry, I missed that. What did you say?
Sir, I heard that you, something like you talked about HF placement in the market. Can you clarify that, please?
No, I was saying that from a refgas point of view, everybody talks of averages, and you know the danger of averages, does not recognize the superlative ability of teams to place the product in the right prices in the market. So, we are doing better than the average. Therefore, to look at the average and say that you've not had any upside from the refgas environment would not be a fair statement. That's what I was trying to say. And of course, on the HF side, we'd always said that our merchant sales would be an X number. Today, we are saying that it's actually far larger than that we're able to place. And some of the material that we are placing is also going in the international markets and also serving high-purity HF as well.
Okay. So, if you can clarify what is our HF utilization rate, sir, at this point of time?
So, we wouldn't want to talk of utilization rates. I mean, rest assured that we've said it's being ramped up, so it's not hit the full capacity, yeah? So, it is being ramped up, and it's a large plant, so there is going to be more time to kind of hit the full capacity.
Understood. Thanks for answering all the questions, sir. All the best.
Thanks again.
Thank you so much. Ladies and gentlemen, anyone who wishes to ask a question may press star and one. Our next question comes from the line of Aditya Iyer with HDFC Securities. Please go ahead.
Hi, am I audible?
Yes, you are.
Congratulations on a great set of numbers. I have a few questions. On the Chemours project, what early indicators are we observing on OEM engagement, and under what conditions could the proposed NX scale-up be triggered?
Again, we've talked about this, Aditya. One, this is more a Chemours conversation than a Navin conversation, but I'll help you in as much as I can. I can't talk about specific numbers, et cetera, on the project. We are under an NDA. But if you look at what's available in the public domain, you will see that Chemours, earlier in this year, qualified its product with a French company called 2CRSi, and they are one of the OEM manufacturers of high-compute kits. They do one new architecture. There's actually, that's been a joint development agreement with them. This then accelerates the adoption in the hypercomputing, because as you know, anybody that establishes hypercomputing environments is likely to use OEMs to qualify their materials, et cetera. It's very encouraging.
I think the fact that as we commission the project and we have line of sight and purchase orders in hand from Chemours, again, signals that there is demand for the adoption that's coming through. We'd always said it would take about 15 months once the project is commissioned to know what the adoption rate is in the market, what the size of that market is, and hence what the capex will be. So, bit premature to talk about the final eventual capex that will result at the end of all of this.
Okay, that's it from my end. All the best to the team and wishing you a happy Diwali.
Same to you, Aditya. Thanks.
Thank you. Our next question comes from the line of Sanjaya Satapathy with Ampersand Capital Investment Advisors . Please go ahead.
Hi, sir. Just wanted to confirm that your annual CapEx, you said that will stay at around INR 700-750 crore this year as well as next. Is that correct?
I said our CapEx range. What I mean by that is we've built a very strong balance sheet, you know, and a very strong capital frame which allows us to hold our working capital to 70 to 75 days, you know, and all of that means that we are able to generate an EBITDA conversion of 60%, which 60%-65% on a more sustainable basis, and that then translates the ability to spend. So, we've got the ability to spend INR 700 to 1,000 crore every year within our CapEx range, which is good enough both from a point of view of the project hopper that we have in our line of sight, as well as the growth that we are targeting over the next five years, right? So, in some years, you will find the CapEx on the lower range, some year on the higher range.
It will end somewhere in the middle every year, right? This year, I've said that we are looking at INR 700 crore. Next year, as we come towards the end of this year, there are several projects in the hopper. Depending on what comes in and gets approved through our stage gate processes, we will be announcing those capexes, and they will certainly then be more clear in terms of what we will spend. Does that help?
Yes, this is very helpful. Last question, sir. Can you just articulate that among the three segments that you have, over next three or year, will there be a significant shift away from HFC business in your overall revenue mix or investment mix?
No, I think we are going to build on the businesses we have, and we, as we've also said, that we are incubating a new business vertical called Advanced Materials, which is, again, we've given out when we spoke in the last call, that if you think of Navin from now to 2030 and look at 20%-25% growth, Advanced Materials will be roughly about 10%-15% of the expanded pie by 2030. But that's a milestone. That's not the end of the journey. This is a growth business we are looking for the next decade.
Understood. Thanks a lot, sir, and wonderful to see your success story panning out the way it is.
Thank you, Sanjaya.
Thank you. Our next question comes from the line of Jason Soans with IDBI Capital. Please go ahead.
Yes, sir. Thanks for taking my question, and congrats on a very strong set of numbers. Sir, I just wanted to know, I mean, if I remember correctly, the utilization for the HFO plant end of FY 2026 was around 80%. Sir, just wanted to know, I mean, of course, you have an extension now, and so, when you look at our average kind of utilization over the years, are you expecting it to be around 80%-90% only going ahead, even, you know, going beyond 2029 and so?
We want, you know, the utilization will improve. I mean, as you know, this product goes into two sort of end applications, right? As the global market scenario improves over time, you will see the demand going up in the construction sector, and of course, this also gets used in chillers for high-cooling, et cetera. So, demand is expected to go in that side too. We will see the volumes go up. What we've indicated there is the numbers that we see as potential based on the minimum quantities or minimum expected quantities from the customer, yeah?
Sure, sir. Sir, earlier you did speak about working on the five molecules in the second phase. You said there are good orders, campaign orders for these molecules. Do we see any visibility for any dedicated plants or any going ahead for any of the molecules?
See, we've always said that in the ag market, we remain constructive of the long-term fundamentals and the demand for agri products, right? Our approach to navigating and accessing that growth is going to be to utilize these current assets and juice them up more and more. Which is why we confidently said that when you look at FY 2027 at the end, you will see that our par of MPP1 and MPP2 will have been far exceeded. Because we've done a lot of work in terms of making sure that more products can be mapped into those plants, and these molecules will get not only mapped into those plants, but also in the debottlenecking space. All in all, will we see a new kind of MPP? I think it's a hypothetical question at this stage.
Our approach is going to remain to extract more and more from the current asset. If there was something that would come up there from a business that would demand a dedicated capacity, of course, we'll openly look at the commercials, et cetera. It passes through our stage gates, we'll go through the approval and announce it in the market.
Sure. Sir, on the last call, you had said that in CDMO space, you're working on 10 molecules. Three molecules expected to have a readout in the next 8-12 months. There is a healthy pipeline clearly. I just wanted any update or any new thing you would want to share on that front? How is that pipeline looking ahead?
Yeah, in fact, I just said earlier in the call that you have got two of those molecules where the progress is very encouraging. So, in the near term, that's the update that I can share actually. I mean, I'm happy to repeat it unless you missed the earlier comment, you know.
No, sir, that's fine. Sir, just one clarification I missed out. You did mention that certain plants for the CDMO are basically dedicated to the darolutamide or the Fermion contract. Could you just repeat what exactly is dedicated for the Fermion.
Dedicated means.
Yeah.
Dedicated means that plant will run. It's been customized to run and optimize for the molecule that we require for that particular product. So, dedicated means we will not do batch product changes, campaign changes. It would run that product. I mean, I don't know another word for dedicated, but that's possibly the best I can explain, sir.
Yeah, yeah. That was a bit. Okay, okay. Sure, sir. That is all from my side. Thank you so much.
Thank you. Our next question comes from the line of Ranjit with IIFL Capital Services Limited. Please go ahead.
Yeah. Hi, sir. Thank you for taking my question, and congratulations on a very strong set of numbers. My question is on the HFO pricing environment. How do you see
Ranjit, I am really sorry, but can you just be a little loud?
Yeah.
Thank you.
Yeah. Is this better?
Yes. As loud as you can.
Yeah.
We can hear it.
Let me use the handset just a second.
Yeah.
Yeah, sir. This is good?
Let's try. Go on.
Yeah. Yeah. I was saying, sir, thank you for the opportunity and congratulations on a great set of numbers. My question is on the HFO pricing environment. How do you see the global HFO pricing environment evolving over the next few years, particularly as the patent expires and the competition increases? Specifically, if you look at-
No, if you are referring to, sorry, I didn't mean to cut your question, but you have to be a little bit louder. Your last part was very faint.
Yeah. My question was largely on the global HFO pricing environment. How do you see it evolving post the patent expiry? In relation to that, the extension that we have seen does offer some bit of a comfort on the realizations.
No, I think the way you have to understand these markets, one, each HFO has a different application, and largely the patent owner will also cover a qualification route for the use of the product. We'd always said that in our discussions with Solstice, they've always indicated that this product is an evergreen product in terms of the end-use application that they're looking for. In fact, like I've said before as well, the extension is not just the time extension, but there is expectation that the volumes will be larger too. Yeah?
Yep. Any comfort on the realization that you have got from them?
Comfort on the realization? Yes, of course. I mean, in what way do you mean? Sorry. We have already given the numbers out as potential revenue numbers, and that is all. I think that should be good enough, no? Ranjit?
Yeah. Right, sir. My question was largely if you see there is a large difference between the HFO and the other refrigerants. Eventually, when these will have a patent expiry, the expectation is that there will be competition and the price erosion will happen.
No, sir. I think you are looking at the ref market and HFO in the ref market. This product is slightly different even if it is an HFO. Similarly, the Chemours product is again a different HFO. So, Chemours product is a different application, Solstice is a different application. You have to look at it from the end applications. If you are looking at the ref market, I mean, the global HFO capacity is 10% of the global ref demand in tonnage terms. I mean, there is not enough volume there to kind of play in the market on the pricing. So, whichever way you look at, HFO is a product that is on the higher pricing side, in the end market for the end application itself, because it is a more greener product, more cleaner product. So, it is going to come at some sort of premium, right?
Yes. Thank you. That was all from my side.
Thank you so much. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for the closing remarks. Thank you, and over to you, team.
All right. Thank you all for taking the time today and be with us. On behalf of the Navin team and Signis, we wish you all a very happy Diwali and a happy New Year in advance, yeah? Thanks again.
Thank you so much. Ladies and gentlemen, on behalf of Navin Fluorine International Limited, that concludes today's call. Thank you for joining us, and you may now disconnect your lines.