Shares of chemical companies SRF Ltd and Navin Fluorine International rose by up to 14% on Thursday, according to Equirus Capital. The analysis indicated a significant increase in global refrigerant gas prices, which boosted investor interest in the two companies.
The rise was caused by supply restrictions in critical refrigerant gases, R32 and R125, according to a major US distributor with considerable market quotas. These supply concerns have put strain on the Heating, Ventilation, and Air Conditioning (HVAC) industry, which is heavily reliant on these gases to operate.
On Thursday, SRF Ltd’s shares jumped 13.8% to a day’s high of Rs 2,678.95 on the BSE, while Navin Fluorine International’s shares rose 13.9% to Rs 3,974.15.
According to Equirus Capital, the restricting worldwide supply of refrigerant gases has driven up prices, offering major financial potential for manufacturers such as SRF and Navin Fluorine.
Analysts noted that SRF is especially well-positioned, with an annual production capability of 29,000 to 30,000 tons of R32 and approximately 7,000 tons of R125. According to the research, every $1/kg increase in R32 prices could boost SRF’s EBITDA by Rs 260 crore, while a similar increase in R125 prices might add Rs 60 crore.
Navin Fluorine, which now produces 4,500 tons of R32 per year, also stands to benefit. The company’s ambitions to raise its R32 production capacity to 9,000 tons by February 2025 might boost its profits even further. Equirus estimated that starting in February 2025, every $1/kg increase in R32 prices will add Rs 77 crore to Navin Fluorine’s EBITDA.
The price increase reflects a rising demand-supply mismatch in the refrigerant gas market, which remains critical to the HVAC industry. Analysts feel that SRF and Navin Fluorine are well-positioned to benefit from this trend, given their robust production capacities and anticipated expansion.
