Navin Fluorine International Limited has emerged as one of the standout performers in the Indian chemical sector this year, with its stock delivering an impressive 80% return to investors in CY2025. The company's remarkable turnaround story is built on multiple strong pillars including a booming contract development and manufacturing organization pipeline, robust export performance, and significant margin expansion across business segments.
CDMO Business Emerges as Growth Engine
The specialty chemicals manufacturer recently hit a fresh 52-week high of ₹6,168.50, reflecting growing investor confidence in its business trajectory. At the core of this optimism lies the company's CDMO business, which has nearly doubled its year-on-year revenue to ₹134 crore in the second quarter of FY26. Exports contribute more than 95% of this segment's revenue, highlighting Navin Fluorine's strong global positioning.
Management has set an ambitious target of achieving $100 million (approximately ₹900 crore) in CDMO revenue by FY28, a goal that appears increasingly achievable given current momentum. The company's pipeline visibility received a significant boost from its agreement with Finland's Fermion Oy, which manufactures the active pharmaceutical ingredient for Darolutamide - a prostate cancer drug experiencing strong global demand.
Infrastructure Expansion and Capacity Enhancement
Analysts from PL Capital highlighted in their November 20 report that peak revenue visibility from Darolutamide is substantial, with the drug expected to achieve $4 billion in global sales for the innovator by CY29. Navin Fluorine's intermediate supply for this molecule is estimated to contribute approximately $60 million at peak performance.
The company has been proactively scaling up its manufacturing capabilities to meet this demand. In September, Navin Fluorine commissioned the first phase of its fourth cGMP (current good manufacturing practices) facility, primarily dedicated to Fermion orders. The plant is currently undergoing validation processes and aims to begin commercial supplies by January 2026. The facility has already been audited by three global firms, underscoring the significant business potential.
Looking ahead, the company plans to undertake phase two expansion of the cGMP-4 facility once capacity utilization reaches 60-70%, indicating management's confidence in sustained demand.
Broad-Based Growth Across Segments
Beyond the CDMO segment, Navin Fluorine is making strategic investments across other business verticals. The company has initiated a debottlenecking project and committed ₹240 crore in capital expenditure for manufacturing R32 refrigerant. The R32 plant, scheduled to become operational by Q3FY27, has peak revenue potential of ₹600-825 crore by FY28.
Additionally, the company is scaling up production of electronic-grade hydrofluoric acid from Q4FY26, which typically commands better margins. The high performance products segment, which manufactures refrigerants and inorganic fluorides, recorded impressive 38% revenue growth in Q2FY26. Similarly, the specialty chemicals segment, producing intermediates for agrochemicals and other industries, grew by 39%, supported by a new plant commissioned in December.
This strong segmental performance translated into consolidated revenue growth of 46% to ₹760 crore, while EBITDA surged nearly 130% to ₹246 crore. More importantly, EBITDA margins expanded by 12 percentage points to 32.5%, reflecting improved operational efficiency and favorable product mix.
Strong Earnings Outlook and Valuation
The second half of FY26 is expected to maintain this strong momentum, with Bloomberg consensus forecasting an 80% jump in FY26 earnings per share. A Centrum Institutional Research report noted that much of the incremental growth stems from clear order visibility, including contracts where Navin Fluorine has already received purchase orders, thereby limiting downside risks compared to industry peers.
Currently, the stock trades at approximately 40 times one-year forward price-to-earnings ratio, which remains below its long-term average. This valuation positioning makes sustained earnings delivery crucial for maintaining investor confidence and stock performance momentum.
While near-term visibility remains strong across segments, the specialty chemicals business is experiencing some pricing pressure due to increased competition. However, the company's diversified portfolio and focus on high-value export markets position it well to navigate these challenges while capitalizing on the significant growth opportunities in the CDMO space and other strategic business segments.
