The surge in SRF Ltd’s shares following the announcement of a price increase for refrigerant gases in the US is indicative of the impact that such developments can have on the market. The price hike of up to 200 per cent for gases like R32 and R125 has the potential to significantly boost the EBITDA of companies like SRF and Navin Fluorine.
These refrigerant gases are essential components in air conditioning and refrigeration systems, and their price increase highlights the importance of the supply chain in ensuring the availability of such key materials. With SRF having a production capacity of 29,000-30,000 tonnes of R32 and 7,000 tonnes of R125, the company stands to benefit significantly from the surge in demand.
On the other hand, Navin Fluorine, with its plans to expand capacity to 9,000 tonnes of R32, is also poised to capitalize on the opportunity presented by the price increase. The Equirus brokerage’s estimate of a $1 per kilogram increase in R32 leading to a boost of ₹260 crore in SRF’s EBITDA and ₹77 crore in Navin Fluorine’s EBITDA underscores the magnitude of the potential impact.
Overall, the news of the price hike for refrigerant gases in the US serves as a reminder of the interconnected nature of global markets and the importance of staying informed about developments that can impact various industries. As companies like SRF and Navin Fluorine navigate these changes, investors and industry observers will be keeping a close eye on how they leverage this opportunity to drive growth and profitability.
