Navin Fluorine International Limited (NSE: NAVINFLUOR) Q4 2025 Earnings Call dated May. 09, 2025
Corporate Participants:
Bhavya Shah — Investor Relations
Vishad P. Mafatlal — Chairman
Nitin G. Kulkarni — Managing Director
Anish Ganatra — Chief Financial Officer
Unidentified Speaker
Analysts:
Unidentified Participant
Vivek Rajamani — Analyst
Sanjesh Jain — Analyst
Madhav Marda — Analyst
Krishanchandra Parwani — Analyst
Rohit Nagraj — Analyst
Ankur Periwal — Analyst
Abhijit Akella — Analyst
Amar Maurya — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Navin Floridan International Limited Q4 and FY ’25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr Bhavior Shah from MUFG IR. Thank you, and over to you, sir.
Bhavya Shah — Investor Relations
Thank you. Thank you. Welcome to the Q4 and FY ’25 earnings conference call. Today on the call, we have with us Mr Vishat, Chairman; Mr Nitin Kulkarni, Managing Director; and Mr Anish Ganakra, Chief Financial Officer of Navin Flora International Limited.
This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations as of today. Actual results may differ materially. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. Our detailed safe-harbor statement is given on Page 2 of investor presentation of the company, which has been uploaded on stock exchange and company website.
With this, I now hand over the call to Mr Vishat for his opening remarks. Over to you, sir.
Vishad P. Mafatlal — Chairman
Good evening, ladies and gentlemen, it gives me great pleasure to welcome all of you to Naveen Fluorine Q4 and Full-Year FY ’25 earnings call. I am joined today by our MD, Mr Nitin Pulkarni; our CFO, Mr Anish Janatra; and Ms Payal Dave from MUFG, our Investor Relations Advisor.
Let me begin by saying that this has been a good quarter for Naveen Fluorine, a quarter where multiple strategic levers came together to deliver a robust performance. We reported our highest-ever revenue of INR2,349 crores and highest-ever quarterly revenues of INR701 crores with EBITDA margins in the last quarter reaching 25.5%. We have adhered to our financial framework, maintaining our debt-to-equity ratio of 0.37 and generating operating cash flows of INR571 crore in the past year.
I am pleased to announce our strategic agreement with to produce their proprietary product Opteon, a two-phase immersion cooling fluid. This manufacturing partnership leverages Chemos innovation and Naveen’s manufacturing expertise to address the data cooling center needs created by AI and next-generation chips. With this partnership, we will foray into Advanced Materials segment in-line with our strategy communicated to you all-in the past. This partnership is a significant milestone for us. It reposes confidence and trust in Navin Fluorine’s capabilities to absorb and commercialize high-end technologies and we are grateful for the same. We have also tied-up with Boost Chemtech, AG Switzerland as a technology partner to commercialize solar and electronic grade HF, exclusively for us. Boost Chemtech AG is a leader in this space for over a century.
We are pleased to announce our R32 project commercialized in March 2025 and is currently operating at optimal capacities. This is a significant validation of our R&D and execution capabilities and it adds further momentum to our high-performance products business, where we continue to see strong demand and pricing traction in both HFO and R32. Encouraged by the continued growing demand of R32 across all geographies, including in India for the RAC market, we are actively engaged with global partners to leverage on this opportunity further.
We have a robust order book visibility in our CDMO business and a strong pipeline in specialty chemicals business. Our ongoing EHF project is progressing well and with the completion expected by Q2 FY ’26 and the CGMP4 Phase-1 facility remains on-track for commercialization in Q3 FY ’26. To conclude, we remain focused on scaling our businesses, strengthening our technology platforms, building up strategic partnerships and delivering sustainable growth to create long-term value for all our stakeholders. Thank you once again for joining us today.
With that, I would like to now hand over to Nitin to provide an update of our operating and business performance.
Nitin G. Kulkarni — Managing Director
Thank you, Vishat, and good evening to everyone. A significant development is our strategic agreement with for the manufacturing of a new two-phase immersion cooling fluid, which is part of their Opteon series. Under the agreement, Navin Fluorin will establish manufacturing facility at Surat at an estimated capex of $14 million, including USD5 million of contribution by. The project is expected to be — expected to be operational during quarter one of FY ’27. As market adoption deepens, Fluorine and Chemos will get into discussions for servicing a potentially higher demand.
Our performance in Q4 reflects not just strong market demand, but also the disciplined execution and operational resilience that our team has demonstrated across segments. We have seen sustained momentum across our verticals. In high-performance products, HBP, we recorded revenue-driven by robust demand and improved pricing realization. This quarter, we commercialized second plant of R32. Our AHF project is expect to be — expected to be commissioned by quarter two of FY ’26. Our tie-up with Boost Chemtech AG for high-purity HF aligned to the expected commissioning of our AHF plant will help us to foray into solar and electronic grid market both in India and overseas.
Moving to the specialty chemical business, we are operating at optimal capacity utilization at both Dahej and Surat and we have good order visibility for FY ’26. After successful validation by our global agrochemical partners, we are also introducing two fluoro intermediates for their new innovative AIs in FY ’26. Commercial production at our facility for fluoro specialty project, which commenced in December 2024 and is currently ramping-up well. In Surat, following our INR30 crore expansion, we initiated first dispatch of this particular product in February 2025.
The CDMO business recorded strong performance in the last quarter. This growth has been driven by both repeat orders and new project wins. Looking ahead, our capex of INR288 crore is progressing as planned. Phase-1, which involves INR160 crore of investment is on-track to be commissioned by end-of-quarter three FY ’26. Overall, I want to emphasize that Navin Fluorine is currently in a good position both operationally and strategically. We are advancing with disciplined project execution and targeted capital investments, all within our defined financial structure.
At the same time, we are pursuing growth to keep pace with an evolving market landscape. Our efforts remain focused on strengthening our existing verticals, expanding into new product lines and upholding the highest standards of safety, compliance and operational integrity.
On this note, I would like to hand over to Anish to brief you on financial performance.
Anish Ganatra — Chief Financial Officer
Thank you, Nathan. Good evening all, and I welcome you all once again on the earnings call. Moving on to the financial performance of the company in Q4 and FY ’25. Quarterly performance, we reported revenues of INR701 crores in Q4 FY ’25, an increase of 16% year-on-year and quarter-on-quarter, led by an increase in revenue across all the verticals.
Operating EBITDA for Q4 FY ’25 was approximately INR179 crores, a growth of 62% year-on-year. Operating EBITDA margin stood at 25.5% as against 18.3% in Q4 of FY ’24. Operating PBT for Q4 FY ’25 was INR115 crores as against INR67 crores, an increase of 72%. Profit-after-tax in Q4 FY ’25 stood at INR95 crores as against INR70 crores in Q4 FY ’24, an increase of 35%.
FY ’25 performance for FY ’25 on a consolidated basis, the company reported net operating revenue of INR2,349 crores as against INR2065 crore in FY ’24, reflecting a growth of 14%. Operating EBITDA stood at INR534 crores as against INR398 crore in FY ’24, up by 34%. Operating EBITDA margin for FY ’25 stood at 22.7% as against 19.3% in the same-period last year.
Operating PBT for FY ’25 was INR336 crores as against INR228 crores, an increase of 48%. Profit-after-tax in FY ’25 stood at INR289 crores as against INR271 crores in FY ’24. As of 31st March ’25, our net-debt to equity stood at 0.37 and net working capital days at 90 days of sales well within the financial frame indicated earlier.
That’s all from my side. We can now open the lines for Q&A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of from ASK NDPMS. Please go-ahead.
Unidentified Speaker
Thank you for taking my question and congrats on great set of numbers and tie-up. Sir, my question is to understand a little bit more deep, you know, with respect to the tie-up with, especially if I look at the nature of the product that we are dealing with. I mean this opens a completely new arena of business for us in terms of targeting the AI customers in terms of. What I’m trying to understand is, if I’m looking at the size of the capex today with respect to the price and the potential of the industry, I think Chemos talk about $5 million, $50 million, $3 billion. I’m trying to understand, one, your scalable with — scalability with. Number two, can you take this technology and knowledge and extrapolate it to other products so that you can target a wider range of customers in that time?
Anish Ganatra
Okay. All right. Thanks,. So yes, we are also equally excited with the tie-up on Chemos and the fact that it opens up a completely new product-line for us. As mentioned by and reiterated by Nitin, this is a foray by Naveen into the advanced materials play. Though it’s not something that’s happened by accident. We’ve always indicated this as part of a strategic priority as we keep progressing on our growth journey.
Now the size of capex and scalability, et-cetera, I think again we’ve said this very clearly in our disclosures too that this is the initial capacity to help with — with the adoption, with accelerating the adoption of their proprietary product into the market. Technology belongs to them. So clearly, you know, it’s not something that we would — we have any rights to the technology or its end-product or its use.
Unidentified Participant
Yeah, sure, sure. So I mean in the sense of targeting the larger audience within the space. I mean, I’m just trying to understand because this is the first step into the space, whether this will open up a new business for us altogether, if I’m pass forward, he say three year.
Nitin G. Kulkarni
Yes. Sorry, good. So basically, what Naveen is demonstrating is our ability to understand, absorb and commercialize the proprietary product-based on the various platforms on which we are operating. So this particular venture has demonstrated that got the skill-set from a gram level to the commercial — commercialization of the product where at each and every stage, we have the required infrastructure, the analytical tools, the skill-set, the people to gain the confidence and demonstrate on-the-ground our ability to make the product which is required for such high-end technologies. So our job is here to demonstrate our abilities to work on these platforms where such technologies we can easily absorb and take it forward.
So we are giving the answer to your question, because of this particular capability of, we are working with other areas in the new edge industry also, which covers like semiconductor, you know the doting gases, you know the specialty additives required for such applications. So there is a hopper where we are working with other global majors for other application for other new edge technologies. So for this particular application, as Anil said, this is exclusive for. This is their technology and we are just going to — we have absorbed and we are going to scale it up and as things progress, it will go further.
Anish Ganatra
So, just to add, we’ve always said that our — you know that we are working on a portfolio of products within the advanced material space. This one has crystallized first. So this is the beginning as we’ve said.
Unidentified Participant
Yeah. And just on the numbers, I mean, what is the kind of asset turn and qualitatively the margins that we can do with this.
Anish Ganatra
So Sudasha see this is an initial capacity that we’ve put in for — for Chemos to help with the — with the adoption. The capacity by itself is sufficient to support several field trials of the product, you know, in terms of actually doing dozens of field trials to accelerate the adoption. The value proposition of the product is such that you know, it is something that is considered essential to the evolution of data centers as next-gen GPUs and chips advance.
You know the sense is that two-phase immersion cooling is going to be the most effective solution in the play. And so you know, like we’ve said in our announcement, as this market sort of adoption accelerates, there will be a conversation for a greater capacity. Unfortunately, in the contract confidentiality terms, we’re not allowed to disclose any asset turns or value or capacity around it. But you have a size of the capex, so you’re free-to make your judgment on that.
Unidentified Participant
Sure. Thanks a lot for your elaborate answer. One final question before I join back the queue is heartening to see the CDMO gaining good traction. One, of course, Permian is scaling up well for us. Amit, just to reiterate, we’ve talked about a lot of products getting into the commercial-stage from late-stage. So if you can qualitatively talk about with respect to because we are putting a lot of capex in this space, you know qualitatively how many products or what is the kind of scale that we can expect in an accelerated model.
Anish Ganatra
See, I think as we’ve said before, that at any given point in time, we are working on 10 to 15 commercial or late-stage products that have the potential to grow up. If you look at our slides in the update that we’ve given today, we’ve talked about a commercial order for a US major that’s expected for delivery in FY ’26. This order follows on a successful scale-up order that was delivered in this quarter. So I mean, as we’ve always said in this vertical, we work with innovative molecules and innovative molecules by definition, you talk about blockbuster level concepts, yeah. So I mean, the capacity we think is actually going to be needed to achieve our growth aspirations.
Unidentified Participant
Sure. Thanks a lot, sir. I’ll jump.
Operator
Thank you. The next question is from the line of Vivek Rajamani from Morgan Stanley. Please go-ahead.
Vivek Rajamani
Hi, sir. Thank you so much for the presentation and congratulations on a great set of results. I’ll probably extend the previous participant’s question on CDMO. Given the progress that you’ve made with the new customers, could you give us a sense of how we should be thinking of the CDMO revenues into fiscal ’26, ’27 vis-a-vis where we are in Q4, is already a great start. So just some thoughts in terms of how that could evolve. And this is an extension to that, you had mentioned that from a strategic perspective, you’re shifting into more late-stage molecules to reduce the lumpy nature of CDMO. I just wanted to understand that the contracts that you have, how much — how far do these contracts get you with get reaching that objective? Thank you.
Anish Ganatra
So Vivek, thanks for the question again. I mean on the CDMO side, as we’ve said before, the strategy was to balance early-stage and late-stage molecules. Late-stage and commercial molecules are going to add scale and growth into this business and that’s where our focus was. They will remove the lumpiness, as you rightly said. We will be looking to sort of continuing to hold our aspirational target to be 100 million. Like I said, 100 million is not — it’s a milestone, it’s not the destination. So effectively, even if we are 90, it doesn’t change the dial. In fact, it’s a tipping point for CDMO to become a material business.
The US major commercial molecule that we talked about, if that molecule succeeds, again, that’s a big sort of molecule to come into our portfolio and will become hopefully something like a Fermion type. You know, the other thing to remember here is that as we sort of scale this, so between now and the 100 million target, and like I said, you can take a rough number there, but the growth will be sort of gradual and progress and it’s not kind of — we’re not talking many years, we’re talking two years. So I’ll leave the math to you.
Vivek Rajamani
That’s clear. Maybe the second question I had was just with respect to the conversations that you’re having with your broader customer-base across segments. I just wanted to get a sense in terms of everything that’s been happening in the last couple of months. Do you get a sense of how customers are thinking about ’25, ’26? Is there — are you getting a sense of them changing any strategy from a procurement perspective? Any high-level thoughts with respect to tariff would be super helpful. Thank you.
Anish Ganatra
So tariffs have a — and I think again following-on the announcement of tariffs, of course, the impact is now very subdued as we speak now. But you know the kind of case for Naveen was neutral to positive as we’ve indicated before. If you look at different verticals, now HPP, the growth gets driven through all the sort of regulatory changes that are happening in the end-markets there, whether you talk of the Montreal protocol, etc. And those growth — the HPP vertical is virtually, I think insulated from the tariff conversations.
On the AgChem side, again, talking to our customers, none of them are indicating anything substantially change in their strategic direction on outsourcing or doing more of work outside with players in India, et-cetera as a result of the tariff conversation. CDMO also, as I’ve indicated before, because we play with innovative large customers, these customers, when they look at their molecules, the intermediate is a very small component of them.
For them, it’s more important to ensure the success of their molecule rather than worry about the tariffs, I think at least. But it’s a space that we continue to watch all-the-time. As of now, we’ve not seen any sort of on any sort of headwind as a result of the tariffs. And the fact that we are making some good progress on our strategic priorities is a good indication of the customer mindset in this space.
Vivek Rajamani
Sure, sir. Thank you I’ll rejoin the queue and all the very best.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, we request you to limit your questions to two per participant. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Sanjesh Jain from ICICI Securities. Please go-ahead.
Sanjesh Jain
Yeah, good evening, sir. Thanks for taking my questions. I got few, but we’ll restrict to two. First on the Boost Chemtech, we did announce the arrangement and exclusive technology transfer. We are already building an HF capacity. There should be more distillation, right, to bring in the purity here. We are talking about PPB level or it is still PPM level? That’s number-one.
Number two, what really the application does it have in solar and on the electronics side, what really characteristics or the effect does it add and how big the opportunities for us because I think India is adding a lot of solar capacity. In that background, can you help us understand that?
Anish Ganatra
Yeah. All right. Thanks, Sandesh, I’ll request Nitin to sort of make this.
Nitin G. Kulkarni
So Sanjesh, here we are talking about the M3 and M5 specification. We are not talking of only PPE 10 or PPB. PPB is part of the N3 and N5. So we are really talking about the N5 grid which goes into the high-end electronic grid. So this is not just the distillation to like high-purity product, it is actually to meet the N5 grade of electronic industry. That is the reason we are talking about the opportunity not only within the Indian space, but outside India.
Second, entry grade, that is what we currently talk about the solar application. And definitely, if you look at the number of the gigawatt installations which are happening in the country and you know the way forward the program is the demand is going to be very robust. It is already in-place and I think this is a good opportunity for us to cater to the global electronics as well as the solar application area. So this is not just the pure distillation, it is much beyond that, which includes the clean rooms as well as the packagings.
Anish Ganatra
Yeah. So just to add there, just to add, Sanjesh, again, this is something that we’ve indicated as our strategic priority to get more value-for-money from every KG of HF, right? So it’s aligned with that loyalty. And so I just wanted to make sure you got that, yeah. Thanks, Sanjesh.
Sanjesh Jain
No, that’s clear. But are we putting any other asset for this or how is it? We haven’t announced any capex?
Anish Ganatra
Not yet, but this will could culminate into that.
Nitin G. Kulkarni
The first step was to bring the right partner into the and that also which will protect our long-term interest. So I think we have crossed that hurdle quite well. And I will say this is a very significant development moving forward into the NFI and increased specification.
Sanjesh Jain
This is not similar to Option, right? This is not contract manufacturing. This is tech transfer and branding by.
Nitin G. Kulkarni
Correct, correct. Correct. This is correct product. You are — product play like 32.
Sanjesh Jain
Very clear, very clear. Just one small question on Opteon. Opteon is a fluorine product or some other chemistry.
Anish Ganatra
Again, under the agreement, Sanjesh, we are not allowed to talk about the chemical composition of this product. So unfortunately, we’ll not be able to clarify on that.
Sanjesh Jain
No problem. Just one last question probably on the gross profit margin and the inventory days, I thought we had a benefit of R32 pricing, we had higher contribution from CDMO. We — we had optimized all the product and at the gross profit margin sequentially dip, what really or how should we see the gross profit margin? That’s number-one.
Number two, inventory days have come down from what 80 plus now to 45 close about that. Is it a sustainable number or there was huge order and we have used to consumed a lot of inventory. How should we see this inventory days of 81? I think we were targeting 90 something. We have overachieved that.
Anish Ganatra
No. So our net working capital days was — we had indicated 100 and where we are today is 90. The inventory reduction that you’re talking about is definitely sustainable because it’s not something that has happened by accident. We’ve been continuously monitoring the levels of inventory and matching that to orders. Yes, we had a scenario where there was a raw materials that were there, which were used up in the order as they came in. So it’s not something that’s a one-off. It’s something that we have a lot of discipline in terms of our procurement around inventory and aligning that with the order books, yeah. So that was — what was your other question? Sorry, I missed that.
Sanjesh Jain
Gross profit margin mix plus pricing.
Anish Ganatra
Yeah. So on the gross profit, I mean, you’re right. In terms of the pricing advantage, we are seeing good sort of tailwinds in the in the HPP business, particularly on the different rev gases in the portfolio around that, whether you look on it year-on-year, quarter-on-quarter and we continue to sort of have a good constructive outlook on that side of things. There have been some cost increases, particularly in certain raw materials like sulfur and the like, which has sort of impacted the margins. But it’s a small dip. I mean, if you look at it on an overall basis for a year to year, it’s still pretty robust. So again, sulfur prices are also I believe sort of softening. So, we will see some correction on that as well.
Sanjesh Jain
No, that’s very clear. Thanks. Thanks for answering all those questions patiently and best of luck for coming quarters.
Nitin G. Kulkarni
Thank you. Thank you.
Operator
Thank you. The next question is from the line of Madhav from Fidelity. Please go-ahead.
Madhav Marda
Hi, good evening. Thank you so much for your time. My follow-up question was, if you could just give some sense around the IR32 market sense we get is that pricing has been quite healthy there. So if you could give us some sense in terms of how the pricing dynamics are today and just your outlook for the next maybe FY ’26 or for the next few quarters, how that could shape up? And I think you also did indicate that you’re not discussing with some global clients for some sort of a partnership. So if you could elaborate a bit there as well? Thank you.
Anish Ganatra
So, thanks for that. I mean, see R32, we’ve always stared away from giving specific pricing guidance because frankly, price is a factor of demand and supply, right? And when we start looking at demand factors that influence the pricing, we remain very, very positive on it. And we see first-hand evidence of it. I mean, if you think about our new capacity coming on-board, I mean, we’ve not had a — we’ve had sort of multiple inquiries on the capacity much before even the capacity came on-stream.
And in fact, in the last call, if you remember, we did indicate that some of these inquiries are large-enough for us to have a strategic conversation. Now since then, what has happened is these inquiries have come from multiple global majors. And as a result of that, our own thinking has evolved and progressed in terms of thinking what is the right-size, what is the right sort of capacity to think over here. And in due course of time as we close-out the commercials around it and take it to investment-stage, we will definitely come out and tell the market about it.
Madhav Marda
And also on the project, the INR540 crore, what’s the utilization rate there and how does FY ’26 look in terms of ramp-up for that projection?
Anish Ganatra
So on that particular one, like we’ve said before, that’s a three-stage complex process that we are undertaking and we are slowly progressing and progressively ramping it. We are not rushing into it. I won’t talk about the capacities now, but while the capacity is being used to deliver the dedicated molecule, we are also modifying the capacity to also address a new molecule at the customers’ funding, which I had indicated even in earlier calls. But we remain very positive about the utilization of this asset by the end of this year. So what we are talking there, remember, if we were for 540, we had indicated a par value, we think we’ll be about 50 plus percent by the end-of-the year-on that number. Roughly.
Madhav Marda
50% plus utilization by the end of FY ’26?
Anish Ganatra
Yeah. So I mean, utilization in terms of — because we are adding in one more molecule on that, I wouldn’t sort of use it in terms of tonnages or machinars, but more in terms of the par value. And therefore, I’m saying that about 50% to 55% is what you will see by the end-of-the year revenue coming in from that asset.
Madhav Marda
Got it. Just one last small question. The capex that you announced with cables, it’s a $14 million capex. So — and I mean with our balance sheet, we could have easily funded the whole thing by our own. Any reason why $5 million? I mean that’s a very small amount for, right? So why didn’t we just invest the whole thing on our own?
Anish Ganatra
Yeah. Yeah. So, you’re right. I don’t think it’s about the value and the quantum of investment. It’s symbolic and it’s a question of partnership. And that’s what that number indicates. It indicates skin in the game, it indicates a partnership. It indicates that both of us are committing resources and effort around developing something that’s revolutionary and needed for the growth of data centers and next-gen chips as they advance.
Madhav Marda
Okay. Got it. And any guidance for margins for FY ’26 in the direction
Anish Ganatra
So I think we’ve said this before. We had reset this to 25%. For now, we will hold it to that number. We’re working very hard to make sure that gets delivered. I mean, just on this call previously, somebody asked me about tariffs, etc. The global scenario is such there are headwinds and tailwinds and we are going to work very hard to maintain that margin. That’s where we are. We’ve come and revisit that at the end-of-the year.
Madhav Marda
25% on a full-year basis.
Anish Ganatra
Yes.
Madhav Marda
Okay. Thank you.
Anish Ganatra
So it’s not — again, this is a range, yeah. We are talking between 23% to 26% 27%, it could be anywhere in-between. But it will be ballpark there. That’s what we are striving towards. Yeah. Of course.
Madhav Marda
Okay. Thank you.
Operator
The next question is from the line of Krishnan Parwani from JM Financial. Please go-ahead.
Krishanchandra Parwani
Yes, hi, sir. Congrats on a very strong set of numbers. Two questions from my side. First, as per my understanding, production of electronic grade HF first requires gasification of an HF. So would the tech-type enable us to do the same or have you developed that in-house?
Anish Ganatra
Krishnan, I’ll ask Nitin to answer that.
Nitin G. Kulkarni
I didn’t get to Krishnan, this is what you are asking.
Krishanchandra Parwani
So I was just asking the gasification of the Nhydrus HF is required in-production of electronic grid HF. So the tie-up that you have done, yeah.
Nitin G. Kulkarni
So it is required for our normal production also?
Krishanchandra Parwani
Okay. Okay. Okay. So that is in-house. Okay.
Nitin G. Kulkarni
Yeah.
Krishanchandra Parwani
Yeah. And on — secondly on CDMO for the commercial order from the US major, would you need a separate — separate capex or not now?
Anish Ganatra
No, not now. Not now.
Krishanchandra Parwani
Okay. Okay. Okay. Thank you, sir. Thank you for answering my question. Wish you all the.
Operator
Thank you. The next question is from the line of Sohit Nagraj from B&K Securities. Please go-ahead.
Rohit Nagraj
Thanks for the opportunity and heartening to know that we have achieved a 25% exit EBITDA run-rate. Our first question is looking at the balance sheet, we have gross blocks of around INR3,000 crores. What is the kind of asset terms on an aggregate basis we are looking from this gross block? And in normal circumstances, when can we achieve that peak revenue potential?
Anish Ganatra
So I think again, Rohit, I mean, that there’s assets over there, like if you look at the — any asset that we commissioned, we talk two years to get to par, right? Now it’s just in this last year, if you look at it, we are talking of the Fluorospecialty capex coming on-board, which was about INR500 odd crores in terms of what we had approved for and also the R32. Now the asset turns vary by businesses.
So if you look at HPP, we are seeing that asset turns of 2x. Again, all of this is market-driven as well, right? And I’m sure you understand that where we play the product it can be 2x, it can be higher than that. Like R32, we are actually seeing that value today very easily. In the AgChem business, we are seeing an asset turn of something like 1.5, 1.4, something like that. In CDMO business, again, we are seeing asset turns of two.
So you know, in terms of there are different sort of things, but when you sort of look, it’s difficult to give you an average because what happens is our investment not consistently the same in different verticals, right? We’ve invested in different times in different verticals based on the opportunity and based on the projects, how they progress.
But if you look at the PAR conversation, then I would sort of indicate to you that the HFO asset has already achieved its par. The — as I indicated before, the fluorospecialty capex will achieve about 50% to 55% of the par in FY ’26, that’s what we are working on. The MPP asset in Dahej, which was commissioned, we are talking of — we had indicated a power of something like INR260 odd crores. We are roughly about 80% of that, 75%, 80% of that.
And in the coming year, we’ll probably see that go up. Again, in the same way the dedicated specialty plant in the hedge, we had achieved the par in an earlier year and this year, we’ve fallen short of the par number. But coming in the in the coming year in FY ’26, we are hopeful of meeting the power over there as well. So I will leave it at that Rohit, if that makes sense.
Rohit Nagraj
Shocked that explains. The second question is, in the last few years, we have seen that we’ve become a partner of choice for manufacturing for the global majors. There is a tech transfer also happening and our capabilities are also improving to that extent. But beyond the tech transfer and the manufacturing that we are doing, how are we shaping up our in-house R&D or rather which are the user segments where we are developing certain technologies or products, how that effort is shaping up? And when can we see new products being launched from RKT for the global markets? Thank you.
Anish Ganatra
All right. So let me sort of take that and then I will ask Nitin to add-on to that. If you kind of look at us, we’ve always talked of a product and service play and our philosophy on both has been very clear where we have both the technical and the commercial capability to-market the product and take the product to the end-customers, we are clearly in the product play where we believe that we can develop that capability, we’re still in a product play.
Similar to what Nitin just mentioned on solar and electronic you know HF play, which will be something of a product play, where we believe that we have manufacturing excellence that we can bring into play, you will see service type agreements much like the HFO agreement or the Chemos agreement, right. So you will see a combination of how Naveen plays into this.
In terms of our own R&D, we’ve established a very strong R&D, both in Surat and in Devas catered to different parts of the business and continuously on our Hopper, Projects hopper, we have both a product plays that we are working on as well as service plays that we are working on. And so it’s going to be a combination of the two, but I’ll let Nitin add-in terms of R&D capability and know.
Nitin G. Kulkarni
What I think Anish you covered most of the things it is very, just to add to addition of for these new edge businesses and opportunities you need a quite different infrastructure. And fortunately, we have built that, we are building further expertise based on the experiences which we are gaining, the knowledge sharing which is happening to us. So I will really say we have very strong now infrastructure, the culture and the mindset to develop and commercialize such processes. So I think that is definitely going to help us a lot while playing a service provider type of a role for high-end technology absorption for these new-age platforms.
At the same time, when we need to do a product play, we need to be a little bit careful about the product selection because we need to understand also our customer expectations, which are our strategic partners. And by what keeping balance between the two, definitely we have the hopper where, like you must be knowing, one of our product called Boron Trifluoride gas which is developed by us today, we are one of the largest player in the — not only in India, but in the world. And we are — but really putting efforts to come up with some more such products. But I think we need to also need some time as well as you know, I think we can also show some patience before we come up to the similar product like we have three.
Anish Ganatra
Yeah, like R32 is another good exercise. Where we’ve gone beyond the markets that we were currently servicing, but because we had enough sort of bandwidth and capability that we could develop, we’ve gone out and even service the US market today. Today, most of the customers we talk to across the globe.
Rohit Nagraj
Right. This is really helpful. Just one last clarification in terms of the FY ’27 CDMO aspiration of $100 million. It stays, right?
Anish Ganatra
You’re sorry, 100 million by FY ’27 CDMO yeah, yeah. So I think I’ve given color to that before as well. It will be one-third, one-third, one-third, one-third supported by the CDMO contract, one-third coming in from any new MSA, and we are making progress on that as we talk and one-third from the base business.
Rohit Nagraj
But that stage,..
Anish Ganatra
Yes, yes, yes, very much.
Nitin G. Kulkarni
Yeah. But as we said, don’t look at only 100.
Rohit Nagraj
Yeah just a milestone. Fair enough. Thanks a lot for answering all the questions. All the best. Thank you.
Operator
Thank you. Participants are requested to please limit their questions to two per participant. The next question is from the line of Ankur Periwal from Axis Capital. Please go-ahead.
Ankur Periwal
Yeah, hi, sir. Thanks for the opportunity and congratulations for a great set of numbers. First question on the gross margin front. Now I’m looking across the three business segments. So CDMO typically is a higher-margin business. In HPP, you have the benefit of pricing coming in there, may not be this quarter, maybe next quarter. So — but your guidance is still the similar range of 23% to 26%. So is it the specialty chemical part wherein there is some bit of pricing pressures or maybe some guidance there will be helpful.
Nitin G. Kulkarni
So I think — if you look at the current quarter one number published by the Global AI, they have shown us some better number but at the cost of the raw-material cost-improvement. So pricing pressure is quite heavy that though there is a volume uptick, but price pressure is going to remain. So we have to address both the challenges to keep our —
Anish Ganatra
Yeah, and Ankur, while sort of reflecting, but you also sort of should bear this in mind that we don’t live in a certain world. I can’t take a linear extrapolation. I mean, there’s so much of uncertainty around us that today, we are — we are being cautious in not guiding any number that’s different and we are working very hard to maintain that 25%. But as the quarters progress, you will see where we get to and when we feel it’s right, we will update that guidance. But today, I think 25% is what we are in a range-bound number working very hard to maintain.
Nitin G. Kulkarni
And of course, just as you know, the way we started this FY — and we exited at 25%. So definitely our focus, our approach is definitely what we can bring best to the stakeholder and we will make everything possible to achieve best.
Ankur Periwal
Sure, Nitin and thanks for that. Just a clarification here. The R32 sales that we are doing, is it largely spot basis or these are probably largely on a contractual basis?
Anish Ganatra
A combination of both actually, OEM as well as contracts, particularly in newer markets.
Ankur Periwal
Okay, that’s helpful. Just second bit, the CDMO growth path, whether it is Fermion or the US molecules that we are working on. Will be fair to say that we will need a CGMP4 here for a full ramp-up as we discussed earlier.
Anish Ganatra
So like we’ve said before, I mean again if you look-back to what we had done in FY ’23, I believe, that was done with GMP 1, 2 and 3, you know. And if you add the capex turns that we are talking in CDMO business, which you’re aware of, a CGMP Phase-1 along with 1, 2 and 3 will get us pretty close to the number we are aspiring to in FY ’27.
Ankur Periwal
Sure. Yeah.
Operator
Thank you. Participants are requested to please limit their question to one per participant. The next question is from the line of Khela from Kotak Securities. Please go-ahead.
Abhijit Akella
Yeah, good evening and thank you. The depreciation and finance costs, the significant increase in this quarter is that largely because of the commissioning of the project, the INR540 crore one? And for the year ahead, if you could please help us with any broad estimate of where these two-line items might go in the context of what we are expecting to capitalize. Also, if you could just share a number on the capex budget for fiscal ’26.
Anish Ganatra
Okay. All right. So your question about depreciation, you’re right, the increase does reflect the capitalization coming in from the fluorospecialty project. And if I had to give you a sense, you should probably look at about INR30 crore 35 crore INR35 crore per quarter as a run-rate. So this is for the assets that have been capitalized and we’re talking about INR140 odd crores and roughly about INR130 crore INR135 crores for the interest hit as well for the whole year.
Now, of course, that interest charge will keep coming down as the debt gets paid out. So — but as we stand now, that’s where we are. The capex plan for the year, I mean it’s again what they’re out in the public in terms of the AHF plan that’s currently ongoing, you know, we’ll obviously there will be capex on it as well as on the CGMP4. Our capex frame to talk about a number of INR500 crores to INR600 crore capability of the balance sheet to fund in terms of cash outflow on capex continues to remain intact because our balance sheet continues to remain strong, coupled with very strong net-debt to equity kind of number two.
Abhijit Akella
Yeah. Yeah, thank you so much. And just one other quick thing. On the Opteon project, is the margin profile comparable with what we have at company-level or somewhat area, is there on the Opteon project, is the margin profile in-line with the overall company-level averages or
Anish Ganatra
I can’t — unfortunately, I won’t be able to help you there. I mean I think — I think we have to look at it like a strategic investment. There will be our asset our capex is absolutely protected. Our returns as what we have our internal threshold are also protected, but one has to look at this as a strategic investment. It’s a short.
Abhijit Akella
Thank you. Understood. Thank you so much. All the best.
Operator
Thank you. The next question is from the line of Amar Maria from Lucky Investment. Please go-ahead.
Amar Maurya
Sir, thanks a lot for the opportunity. My question is on. Sir, in terms of the technology readiness at the chemor level, is this technology that to nine?
Anish Ganatra
There’s a lot of background noise at your end, but if I understood you’re asking is the technology sort of structure, is it better now? Yeah, sorry, go on, what was your question, maybe you can repeat?
Amar Maurya
Yeah. Yeah. So what I’m what I’m trying to understand is in case of Option, is the technology — in the technology level — technology readiness level, is this technology at Optian — at Chemor level is like to the level of 7 to nine so that you can do a commercial delivery by Q1 ’27. So we are talking about commercial deliveries by Q1 ’27, right?
Anish Ganatra
Yeah. So this is a product we’ve actually already been making for them in smaller quantities at the moment. And part of the reason — so we’ve been working with Chemos and these partnerships don’t happen overnight. But the idea is that this is now coming to a level where an initial scale capacity is seen as necessary to progress the adoption in the market. And so you know, so yeah, I mean I don’t know-how else to answer what you’re asking.
Amar Maurya
Okay. And secondly, this chemical — are there two chemicals, one for direct-to-chip and one for immersion or chemical is same for the both.
Anish Ganatra
Now this is two-phase immersion cooling.
Amar Maurya
Like I’m saying, sir, you are going to make immersion cooling also and direct to chip cooling also, right?
Anish Ganatra
So there are. So I didn’t say that I’m — so just hear me out, two-phase immersion cooling liquid is the capacity we are setting up for.
Amar Maurya
Okay. So this is immersion. Not immersion cooling technology. So that means you are OEM, you are targeting more of the data center.
Anish Ganatra
So Amar..
Nitin G. Kulkarni
Don’t miss this definition.
Anish Ganatra
Yeah, it’s very critical.
Amar Maurya
No, because sir, immersion cooling is still not approved by Dell, HP, Lenovo, anybody.
Nitin G. Kulkarni
No, no, no. Don’t go into that. I’m just talking about the product description. So when you are saying — I’m just saying you know we are talking about two-phase immersion cooling.
Anish Ganatra
Yeah. Yeah. I mean we’ll leave it for you to charge in terms of the product, et-cetera from your research.
Amar Maurya
Overall opportunity size of this market globally?
Anish Ganatra
Again, something that I can only tell you from what Kemos has talked in their public sort of you know media release yesterday, we are talking about a potential — the entire liquid cooling market is today 0.5 billion, expected to become something like 3 billion by 2035, okay and two-phase immersion cooling liquid is part of that market size.
Amar Maurya
Got it. Got it.
Operator
Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I would now like to hand the conference over to the management for closing comments.
Anish Ganatra
All right. So again, thank you all for taking the time today evening. I really appreciate the quality of the questions and the interactions and look-forward to our next sort of interaction on this. Yeah. Thank you. Thanks for all of —
Nitin G. Kulkarni
Thanks everyone, yeah.
Operator
Thank you. On behalf of Navin International Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines,