Navin Fluorine International (NFIL) delivered better-than-expected results in the second quarter of FY25, surpassing estimates for both EBITDA and PAT by 6% and 12% respectively.

The company's gross margin was 56.8%, while the EBITDA margin contracted slightly by 10 basis points YoY to 20.7%.

Despite a 3% decline in earnings YoY to INR 588 million, the HPP segment experienced strong growth of 22% due to efficient operations at the HFO and R32 plants, increased R32 sales, and improved R22 gas realizations.

The capital expenditure for the new R32 plant and AHF capacity is on track for commissioning as planned, with management confirming definite offtake from the new R32 capacity.

Analysts project a compound annual growth rate (CAGR) of 21% for revenue, 28% for EBITDA, and 31% for adjusted PAT over FY24-27.

The stock is currently trading at approximately 40 times FY26E EPS of INR 82.1 and around 26 times FY26E EV/EBITDA.

The target price is set at INR 3,240, based on a valuation of 35 times the estimated EPS for September 2026, with a Neutral rating maintained by Motilal Oswal.