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Hydrofluoric Acid Expertise Merits Right-to-Win in a Commodity Market

HF is a highly corrosive, tightly regulated chemical, requiring special care for manufacture and transportation. Leveraging over 30 years of experience TANF has expanded its core HF facility by 14,850 MTPA in Q3FY25 and a further expansion for 17,160 MTPA (50% of current HF capacity) is underway. TANF has further bolstered its HF capacity with an addition of the country’s only solar grade diluted hydrofluoric plant (Solar Grade DHF) of 20,000 MTPA, which was fully commissioned in October 2025. Since HF is the core product from which advanced fluorine chemistries are built, we believe this will be TANF’s right-to-win in the refrigerant gases (R-32) and other advanced fluorine chemistries

R-32: Demand is Exponential, Climate Change Actions Limit Supply

TANF has completed 60% of its R-32 project with a capacity of 20k MTPA, commissioning of this plant is expected by the end of Q3FY27E. HF and Dichloromethane (DCM) form the critical RM for R-32, which is the primary refrigerant gas used for residential space cooling. Demand for R-32 in India is driven by deepening penetration of Air Conditioners (8% vs 50%+ World Average) and earlier production restrictions in other countries (China 10% in CY27E). Whereas, for India the Kigali Amendment will activate only after January 1, 2028, with CY27 as a "free year" for production and consumption. The amendment envisages a 20-year phase out, with India quota reducing by only 10% in CY32. TANF has pre-contracted 65% of its capacity at ~ USD 5.0/kg to Indian and MNC customers. The projected supply glut is not foreseen to be materially impacting revenue because the excess supply will be absorbed by rising demand from outside India due to production cuts there as well as a fast-growing (15% CAGR) local demand.

Strong Earnings Growth Coupled with a Strong Balance Sheet

TANF raised ~INR 3.5 Bn from marquee investors to fund the cost of R-32 plant. Thus, a combination of internal reserves and funds raised will be used to finance the INR 4 Bn capital expenditure. Additionally, with an objective of enhancing supply agility, TANF has also planned further capital expenditure of INR 1.5 Bn towards a new HF plant (17,160 MTPA) and INR 0.4 Bn towards a new SAP plant (82,500 MTPA). After the commissioning of all three plants, the capacity is expected grow to 1.8 times of the current capacity. We believe this will lead to a solid growth in quality earnings backed by cash flows. We estimate revenue to increase at a CAGR of ~40% over FY26–FY29E and PAT to grow at a CAGR of ~52% over the same period.

Valuation & View

We believe TANF is an ideal re-rating candidate considering strong revenue visibility (65% of R-32 capacity is contracted), margin is expected to improve to ~23% (+500 bps) by FY28E driven by 2x higher realization of R-32 versus commodity HF. We value TANF using the DCF approach at INR 3,750. Our valuation implies a comfortable PEG ratio of 0.67x over FY26–FY29E and an upside of 38.2%. Peers trade at a 50% premium to TANF (25x vs. median of 38x) on FY28E forward PE, re-enforcing our view. We, therefore, rate the stock as a ‘BUY’.

Key Risks

Raw material import dependence, feedstock price volatility, HF demand cyclicality, environmental and safety risk, customer and segment concentration and non-allocation of production quota.

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