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This smallcap multibagger of past 10 years surges 34% in 2 sessions amid coronavirus scare

The stock had six ‘buy’, one ‘outperform’, two ‘hold’ and one ‘underperform’ ratings.

, ETMarkets.com|
Last Updated: Feb 27, 2020, 09.55 AM IST
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JM Financials said the crisis would positively impact the company’s top line and be mildly positive for its margin and bottom line.
Shares of a smallcap company, which has multiplied investor wealth by 26 times in last 10 years, has jumped as much as 34.32 per cent in just two sessions over Tuesday and Wednesday in a depressed market.

Analysts say perhaps a fresh rally has just begun on the counter. The stock is of Navin Fluorine International, a company that manufactures specialty fluorochemicals.

The Rs 7,900 crore market-cap company on Tuesday bagged a large order worth Rs 2,900 crore ($410 million) from a global company for manufacture and supply of a high performance product (HPP).

Navin Fluorine said the contract is for seven years and this product is not part of its existing portfolio. Navin Fluorine will be investing Rs 365.50 crore to set up a dedicated manufacturing facility and spend approximately Rs 71 crore to set up a captive power plant to deliver the order. Supplies are expected to commence from Q4 of FY22, the company said.

Following the order, the scrip hit the 20 per cent upper circuit on Tuesday after a nearly 12 per cent gain on Wednesday, when it had hit a high of Rs 1,629.

Brokerage Emkay Global said the big order win boosts Navin Fluorine’s long-term revenue visibility and raises confidence in its capability to win large orders in the future. The brokerage raised its valuation multiple for the stock to 29 times FY22 EPS from 25 times earlier.

The brokerage has a ‘buy’ rating on the stock with a price target of Rs 1,600, which it has already crossed.

As per Reuters data, most analysts are bullish on the multibagger. The stock had six ‘buy’, one ‘outperform’, two ‘hold’ and one ‘underperform’ ratings as of Tuesday

The Navin Fluorine stock has delivered 2,479 per cent return in last 10 years. Year to date, the scrip has made investors richer by 59 per cent.

A shutdown of factories in China due to coronavirus also added to the attraction of the Indian specialty chemical suppliers, especially Navin Fluorine. China is the world’s largest producer of fluorspar.

JM Financials said the crisis would positively impact the company’s top line and be mildly positive for its margin and bottom line. Though, prices of raw material will increase due to the virus, which will have to be negotiated.

“We note that Navin Fluorine, in its earnings call did indicate that it is seeing some increase in inquiries and they should be able to pass through the increased fluorspar prices and could also gain margin in legacy segments like refrigerant gas and inorganic fluoride,” JM Financial said in a note.

The stock will soon be included in Nifty Smallcap100 index from March 27, which may result in some more money coming into the counter.
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