SRF, Navin Fluorine shares surge 13% each on Thursday — Key factors explained

Shares of both SRF Ltd. and Navin Fluorine Ltd. are locked in a 10% upper circuit on Thursday, January 9. Both the stocks are up for the third day in a row.

The surge comes after CNBC Awaaz reported that US gas distributors announced a price hike for refrigerant gases. IGas USA said that the supply of R32 and R125 has been impacted and prices will be increased by up to 200%.

Brokerage firm Equirus in a note said that every $1 per kilogram change in realisations of the R32 refrigerant could increase SRF’s Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) by ₹260 crore.

Similarly, every $1 per kilogram change in realisations of the R32 gas can improve Navin Fluorine’s EBITDA by ₹77 crore.

So why does this change impact both these companies?

SRF has an overall capacity of 29,000 to 30,000 tonnes of the R32, while Navin Fluorine has close to 4,500 tonnes. The latter also expects to add another 4,500 tonnes of capacity of the R32 by next month.

SRF also has a capacity of nearly 7,000 tonnes for the R125.

The R32 refrigerant is used in air conditioning and low-temperature refrigeration systems. It absorbs heat and creates cool air. Similarly, the R125 is also used in air conditioning, refrigeration and other industries.

Shares of SRF are now up 13% at ₹2,658.85, while those of Navin Fluorine are also up 13% at ₹3,954.25.