From the first fluoro-pharmaceutical drug in CY54 – Florinef, fluoro compounds have found an ever increasing acceptance in new Pharmaceutical drugs
Around 40% of new registered drugs are fluoro-pharmaceutical drugs. Even the largest selling drug of all times – Lipitor – is a fluoro-pharmaceutical drug. – NFIL, with nearly five decades of experience in fluorination, is expected to benefit from the growing usage of fluoro-pharmaceuticals.
The company is building an INR2b multi-purpose plant (MPP) by 1HFY23. The MPP would exploit opportunities in Life Sciences and Crop Protection, with an expected asset turnover of ~1.4x (i.e. ~25% of total revenue in FY21). – While other segments like fluoro-agrochem and new age Fluorochemicals (for example HPP) would contribute to NFIL’s growth, this research, in particular, takes a look at the vast opportunity in the Life Sciences segment.
We value NFIL at 40x FY24E EPS to arrive at our TP of INR4,195. We maintain our Neutral rating owing to the limited upside. We await a right entry point, highlighting our aforementioned optimism on fluorination chemistry.
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