Buy Gujarat Fluorochemicals Ltd for Target Rs 4,698 by Elara Capital
R32 production starts; EV optionality builds
Gujarat Fluorochemicals (FLUOROCH IN) reported Q4FY26 revenue of INR 13. 7bn, up 12% YoY, while EBITDA was flat at INR 3. 1bn as Battery Material continued to absorb ramp -up cost. Performance of the Chemical segment was stronger, with revenue at INR 13. 6bn, up 11% YoY, EBITDA at INR 3.5bn, up 13% YoY, and EBITDA margin at 26%. Consolidated PAT declined 41% YoY to INR 1.1bn, partly due to losses in Battery Material and one -offs in Q4FY25 . Reiterate Buy with a higher TP of INR 4,698 (from INR 4,083)
Fluoropolymers, the core earnings driver:
In Q4,revenue from Fluoropolymers grew 19% YoY to INR 8.5bn, led by value -added products and higher volume. The management had indicated earlier that capex in this segment should reach optimum utilization in FY27, while fresh capex will continue to support gro wth in high -value applications such as semiconductors, EVs/BESS, clean energy, hydrogen fuel cells, electrolyzers and solar.
R32 commencement to add a new growth lever in FY27:
R32 production started in March 2026, strengthening FLUOROCH’s refrigerant portfolio. The management expects increased R32 production to provide major growth for the Fluorochemicals segment, led by healthy refrigerant demand from residential air -conditioning, commercial refrigeration, cold -chain infrastructure and AI/data -center cooling applications. FLUOROCH has earmarked INR 1.5bn as FY27 capex for refrigerant gas and related infrastructure capacity expansion.
Battery Material – FY27 to be a transition year and FY29 monetization year:
Battery Material reported Q4 revenue of INR 110mn and EBITDA loss of INR 450mn, but operational milestones improved. LiPF6 is approved by most major global electrolyte players and has orders in place for FY27 and beyond . LFP CAM received initial customer approvals, with commercial supply expected after qualification s. For PVDF binder , qualification is complete, with commercial sales expected in H1FY27. Management reiterated INR 60bn cumulative EV capex by FY28, ~ 2x asset turnover, 25%+ EBITDA margin and reaching full potential in FY2
Near-term, EV will drag, but expect stronger FY28 with ramp-ups:
We raise FY27E revenue by 6 % and EBITDA by 2% with R32 ramp -up, though partly offset by losses at EV start -up. We raise FY28E revenue/EBITDA estimate by 6%/8%, led by better utilization in fluoropolymers, R32 ramp -up and initial EV operating leverage. We introduce FY29E estimates.
Reiterate Buy with a higher TP of INR 4,698:
This is led by higher FY28E/29E earnings visibility from fluoropolymers, R32 and scale -up in Battery Material . Chemicals provide near - term earnings support, while EV material create FY28 -29 optionality. We remain conservative on FY27 EV profitability and assume that the full EV potential is back -ended, in line with the management’s FY29 realization timeline. We value FLUOROCH on DCF, assuming 5.0% (unchanged) terminal growth with a 9.3% (unchanged) cost of capital and 38% (from 3 5%) EBITDA CAGR in FY2 6-29E . Monitor utilization ramp -up for R32 , improvement in fluoropolymer mix, EV customer qualification -to-revenue conversion, LiPF6/LFP/binder offtake, EBITDA losses in battery material in FY27, and execution of INR 31.5bn FY27 cape
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