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The Indian stock market witnessed a significant surge in the share prices of SRF Ltd and Navin Flourine International Ltd on Thursday. This dramatic increase, reaching up to 15% in early trading, was directly attributed to reports of a substantial rise in the prices of refrigerant gases in the United States. Navin Flourine International, a key player in the specialty chemicals sector, saw its shares skyrocket by 13.89%, hitting a fresh 52-week high of Rs 3974.15. This impressive performance resulted in a market capitalization increase to Rs 19,072 crore, with a trading volume of 0.66 lakh shares and a turnover of Rs 25.44 crore. Simultaneously, SRF Ltd experienced a remarkable 14.72% increase, pushing its share price to Rs 2697. The company's market cap climbed to Rs 78,900 crore, with a trading volume of 1.56 lakh shares and a turnover of Rs 41.29 crore. This marks the third consecutive day of significant gains for both companies, highlighting the strong investor confidence driven by the escalating refrigerant gas prices.
The catalyst for this market surge is the reported price increase of refrigerant gases in the US market. Reports indicate that US gas distributors have implemented substantial price hikes, with some distributors like IGas USA reporting supply chain disruptions affecting the availability of R32 and R125 refrigerant gases. These disruptions have led to price increases of up to 200 percent, significantly impacting the profitability of companies involved in the production and distribution of these essential gases. This price escalation has created a ripple effect across the global market, influencing the prices of these crucial chemicals.
Financial analysts have weighed in on the potential impact of these price hikes on the financial performance of SRF and Navin Flourine. Equirus Securities, a prominent brokerage firm, has projected a substantial increase in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for both companies. Their analysis suggests that a US$1/kg increase in the realization of R32 could boost SRF's EBITDA by a remarkable Rs 260 crore. Similarly, they predict that a comparable price hike for Navin Flourine could elevate its EBITDA by Rs 77 crore. These projections underscore the significant financial benefits that both companies stand to gain from this unexpected price increase in the US refrigerant gas market. The brokerage firm also highlighted the production capacities of both companies, noting that SRF boasts a substantial capacity of 29,000 to 30,000 tonnes of R32 and a further 7,000 tonnes of R125. Navin Flourine, while having a smaller current capacity of 4,500 tonnes of R32, plans to double this capacity to 9,000 tonnes by February 2025.
The escalating prices of refrigerant gases in the US and the subsequent impact on the stock prices of SRF and Navin Flourine underscore the interconnectedness of global markets and the sensitivity of specialized chemical industries to supply chain disruptions and price fluctuations. The strong positive reaction from investors demonstrates the market's expectation of significant financial gains for these companies in the short to medium term. However, the long-term implications of this price surge remain to be seen, and factors such as global supply chain stability and potential competitive responses will play a key role in shaping the future trajectory of both companies. Continued monitoring of the US refrigerant gas market and any potential shifts in global demand will be crucial in assessing the sustainability of this positive trend for SRF and Navin Flourine.
Source: SRF, Navin Flourine shares rise up to 15% today, here's why