Navin Fluorine shares crack 18% in 4 sessions; should you avoid entry at current levels?

Shares of Navin Fluorine International have been on a downward spiral over the past few sessions as the stock has seen a sharp correction in its price after the resignation of the managing director (MD) of the company. The company appointed an interim MD in the meantime.

Radhesh R Welling had tendered his resignation as the managing director and a director on the board of the company citing personal reasons, said the company in an exchange filing on September 28. His resignation was accepted by the board of directors of the company at its meeting. Its executive chairman Vishad Mafatlal will take over the charge of interim MD.

Shares of Navin Fluorine International have cracked about 18 per cent in four trading sessions from its price around Rs 4,400 on September 28. The stock posted another intra-day fall on Thursday, slipping about 5 per cent to Rs 3,650.50 during the session. The company's market capitalization is close to Rs 18,400 crore.

Shares of Navin Fluorine have lost about 20 per cent in the last one month, while stock has wiped out its gains of 2023 to slip by about 10 per cent in the current calendar year. However, the stock has delivered a return of 500 per cent in the five years to the investors.

Morgan Stanley has taken note of this high attrition in the top management of the company. "We expect to hear more from the company on plans to tackle the same," said the foreign brokerage firm, which has maintained its 'overweight' rating on the stock with a target price of Rs 4,951.

Navin Fluorine will be hosting an analyst meet soon, as early as next week. The officials of Navin Fluorine International will be interacting with analysts and/or investors on Monday, October 9, 2023 at 9.30 am, said the company in a separate exchange filing.

Kotak Institutional Equities thinks Navin Fluorine has a deep enough pool of managerial and technical talent to be able to withstand the departure of its well-regarded MD and CEO Radhesh Welling. However, the current downturn in the chemical industry is the larger worry for it, said the brokerage.

"The cuts are entirely in the Specialty chemicals, which may be feeling the pressure of a slowdown in the global agrochemical industry. While, we do not currently make any changes to our revenue estimates,  We cut our FY2024-26E EPS estimate by 3-10 per cent to factor in possible slippages in the ramp-up of growth projects, it added.

Despite the recent correction, valuations are still high for NFIL and that too on high expectations, which involve not just strong revenue growth, but also significant margin expansion. Overall, we like the Navin Fluorine growth story, but would look for better entry opportunities, it added. "We cut our target P/E to 30 times and lower our September 2024 fair value to Rs 4,170," said Kotak.

Talkin about technicals, analysts remain cautious on the shares of Navin Fluorine. The stock has witnessed a breakdown of a head and shoulders pattern with strong volumes and its weekly chart has given a breakdown of a channel formation, said Pravesh Gour, Senior Technical Analyst at Swastika Investmart.

"The structure on the charts is distorted on the counter as it is trading below its important moving averages. Both MACD and the momentum indicator RSI are negatively poised," he added, suggesting Rs 3,670 is the critical support on the downside, while Rs 4,000 is a major hurdle on the higher range.


Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

Also read: Hot stocks on October 5, 2023: Zomato, Suzlon Energy, Navin Fluorine, Titan, Marico and more

Also read: Stock recommendations by share market analysts for October 5, 2023: Suzlon Energy, TCS, HDFC Bank & Bank of Maharashtra

Also read: NPCI's pact with UAE’s Al Etihad Payments, PM Modi to launch projects worth Rs 12,600 crore in MP in Top News on October 5: Share markets outlook, ICC World Cup 2023 to begin with ENG vs NZ match

Also read: Top 10 stocks to watch on October 5, 2023: HAL, Nazara Tech, IEX, Timken, Jubilant FoodWorks, Sheela Foam & others