Target: ₹4,440
CMP: ₹4,051.20
We believe Navin’s existing CRAMS molecules are likely to scale up meaningfully over the next 3-4 years. As per our analysis, Navin’s CRAMS molecules are key intermediates of several patented pharmaceutical drugs. Some of these drugs have been launched recently and their end-usage has been growing significantly.
As per industry estimates, sales of these patented drugs are likely to peak by CY25-26. Hence, in our view, with the ramp-up of these patented drugs, Navin’s CRAMS revenue could demonstrate a 29 per cent CAGR over FY22-25 and reach $87 million by FY25 and surpass $100 million by FY26.
Further, with the ramp-up of its specialty chemicals sales and contracted HFO sales, Navin’s overall revenue could post a 26 per cent CAGR over FY22E-25. We maintain Buy with an unchanged target price of ₹4,440/share on account of strong outlook of Navin’s CRAMS business along with long-term growth visibility from its multi-year contracts in specialty chemicals and HFO refrigerant gas.
With a jump in revenue contribution of high margin businesses (CRAMS, specialty chemicals, and HFO) to 78 per cent in FY25 (vs. 62 per cent in FY22), EBITDA margin is likely to expand to 29 per cent in FY24-25. As a result, EBITDA is likely to post a 31 per cent CAGR over FY22-25 and PAT is likely to register a 32 per cent CAGR over FY22-25.
We maintain Buy with an unchanged March 2023 target price of ₹4,440/share