InvestorQ : Why did Navin Fluorine report a fall in profits in the September 2022 quarter?
Dilmini Mercia made post

Why did Navin Fluorine report a fall in profits in the September 2022 quarter?

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Dawn Cherian answered.
1 month ago
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For the second quarter ended September 2022, Navin Fluorine (a subsidiary of the Mafatlal group), reported 23.7% growth in sales to Rs419.20 crore on a consolidated basis. Revenue growth was 5.45% sequentially. Navin Fluorine is engaged in the manufacture of specialty chemicals and this business has seen demand expand substantially in the aftermath of troubles in China following their environmental restrictions as well as COVID related curbs. The downside risk arose from the export markets, which has been rather tepid amid recession fears. The company has declared an interim dividend of Rs5 per share subject to the approval of shareholders. Cash from operations halved due to working capital lock-in.

Navin Fluorine

Rs in Crore

Sep-22

Sep-21

YOY

Jun-22

QOQ

Total Income (Rs cr)

₹ 419.20

₹ 338.96

23.67%

₹ 397.52

5.45%

Net Profit (Rs cr)

₹ 57.81

₹ 63.23

-8.57%

₹ 74.45

-22.35%

Diluted EPS (Rs)

₹ 11.66

₹ 12.75

₹ 15.01

Net Margins

13.79%

18.65%

18.73%

Profits were lower in the quarter on a yoy comparison due to a spike in input costs and that is the problem faced by most of the specialty chemicals companies despite robust demand. Profit after tax (PAT) for September 2022 quarter was down -8.57% at Rs57.81 crore and this was largely triggered by the 33% spike in raw material costs. This was largely on the back of supply chain constraints. Due to the supply chain uncertainty, working capital locked in inventories put pressure on the quarterly performance of Navin Fluorine. PAT margins were lower yoy at 13.79% in the Sep-22 quarter compared to 18.65%. Net margins were also sharply lower on sequential basis.

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