Shares of SRF and Navin Fluorine jumped up to 14%, know what caused the stormy rise

Shares of chemical companies SRF Limited and Navin Fluorine International saw a sharp jump of up to 14% on Thursday. The report says that global refrigerant gas prices have increased. This is due to the shortage of supply of key refrigerant gases - R32 and R125. This will also affect the heating, ventilation, and air conditioning (HVAC) sector, which depends heavily on these gases for their operations. This increased investor interest in both firms.

On Thursday, shares of SRF Limited rose 13.8% to a day's high of Rs 2,678.95 on the BSE. Shares of Navin Fluorine International rose 13.9% to Rs 3,974.15. According to Equirus Capital, global supply shortages of refrigerant gases have led to price rises. This has created significant financial opportunities for manufacturers like SRF and Navin Fluorine.

Analysts said SRF is particularly well-positioned. It has an annual production capacity of 29,000-30,000 tonnes of R32 and about 7,000 tonnes of R125. The report estimated that every $1 per kg increase in R32 prices could increase SRF's EBITDA by Rs 260 crore. At the same time, a similar increase in R125 prices could increase its EBITDA by Rs 60 crore.

Currently, Naveen Fluorine produces 4,500 tonnes of R32 annually. It is likely to benefit handsomely from the price hike. The company is also likely to double its R32 production capacity to 9,000 tonnes by February 2025, which may further enhance its profitability. Equirus estimates that w.e.f. February 2025, for every US$1/kg increase in the price of R32, the EBITDA of Naveen Fluorine would increase by Rs 77 crore.

The shares of SRF have been pretty sluggish for some time now. It has given a return of only 11.81% in the last 6 months. However, in five years it has given a multibagger return of 282.62%. The same period also saw Naveen Fluorine rise by around 5%.