SRF, Navin Fluorine Stocks Surge on Refrigerant Gas Price Hike

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Shares of SRF Ltd. and Navin Fluorine International Ltd. witnessed a sharp rally of up to 14% on Wednesday following a significant hike in global prices for refrigerant gases such as R32 and R125.

The price surge, driven by global supply constraints, is expected to boost the earnings of key producers in the specialty chemicals sector.

Stock Performance

SRF’s stock jumped 12% in intraday trading, while Navin Fluorine saw a 14% increase, reflecting strong investor confidence.

Analysts noted that the surge was fueled by expectations of higher profitability stemming from the price hike in refrigerant gases, which are crucial components in the HVAC (Heating, Ventilation, and Air Conditioning) industry.

Refrigerant Gas Prices on the Rise

The prices of R32 and R125, key refrigerants used in air conditioning and refrigeration systems, have risen sharply due to tight supply conditions globally. This development is expected to benefit Indian manufacturers, who are significant players in the international market.

• SRF: With an annual production capacity of approximately 29,000 to 30,000 tons of R32 and around 7,000 tons of R125, SRF is well-positioned to capitalize on the current market dynamics.
• Navin Fluorine: The company, which produces about 4,500 tons of R32 annually, has plans to double its capacity by February 2025, further enhancing its ability to meet growing demand.

Financial Implications

Industry experts predict significant earnings growth for both companies. For every $1/kg increase in R32 prices, SRF’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) could increase by approximately ₹260 crore. Similarly, Navin Fluorine could see an EBITDA boost of ₹77 crore starting in February 2025 when its expanded capacity becomes operational.

Market Sentiment

The surge in stock prices also pushed the relative strength index (RSI) of both companies into the overbought zone, indicating heightened market interest.

Despite this, analysts remain optimistic about the long-term growth prospects of SRF and Navin Fluorine, given their strategic position in the specialty chemicals sector.

Outlook

The refrigerant gas price hike underscores the impact of global supply dynamics on Indian chemical manufacturers. With robust production capacities and strategic expansion plans, SRF and Navin Fluorine are poised to benefit significantly from the current market conditions.

Investors and market watchers will continue to monitor developments in the refrigerant gas segment, which remains a key driver for the specialty chemicals industry.

For now, the price surge presents a lucrative opportunity for both companies to enhance their earnings and strengthen their market position.

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