Hold Gujarat Fluorochemicals Ltd For Target Rs.4,498 by Prabhudas Liladhar Capital Ltd
Growth across key segments supports Q1 performance
FLUOROCHEM reported consolidated revenue from operations of Rs15.9bn in Q1FY27, up 24% YoY and 16% QoQ. The Fluorochemicals segment grew 52% YoY and 44% QoQ, driven by higher R32 volumes and healthy growth across the refrigerant portfolio. Existing capacities are operating at optimal utilization levels. Near-term growth is expected to be supported by increasing applications across semiconductors, EVs/BESS and clean energy sectors. The Fluoropolymers segment grew 15% YoY and 8% QoQ, aided by volume growth and an improved product mix. Mgmt. guided 15–20% annual growth in Fluoropolymers. Incremental R32 capacity is expected to be commissioned in Q2FY27, while the existing R32 plant is operating at full utilization. The new R134a brownfield project remains on track for commissioning in FY27. The Bulk Chemicals segment recorded 11% YoY growth, driven by improved realizations. Battery Chemicals contributed Rs290mn to revenue, with management indicating FY27 and FY28 as key growth years.
We believe Fluoropolymers will remain the primary growth driver, while Battery Chemicals may take longer to make a meaningful contribution to topline, with LiPF6 likely to be the key contributor in FY27. The stock is currently trading at 53x FY28E EPS. We value the company at 52x FY28E EPS and arrive at a target price of Rs4,498. We maintain our HOLD rating on the stock
Fluorochemicals segment drives revenue growth:
Consolidated revenue stood at Rs15.9bn, 24% YoY/ 16% QoQ (PLe: Rs14.5bn, Consensus: Rs15.6bn), actual topline was 9.7% higher than our estimates. GFL EV contributed Rs290mn to Q1FY27 revenue, while EBITDA remained negative at Rs300mn. Gross profit margin was 66.3% (vs 65.1% in Q1FY26 and 63.3% in Q4FY26), actual gross profit was Rs10.5bn. Gross profit margin expanded by 120bps YoY.
EBITDAM expanded by 450bps QoQ:
EBITDA stood at Rs4.3bn, 24.4% YoY/ 39% QoQ. EBITDA margin came at 27% (PLe: 24%, Consensus: 26%) vs 27% in Q1FY26 and 23% in Q4FY26. Reported PAT stood at Rs2.2bn, up 20.3% YoY and 119% QoQ, with the PAT margin at 13.8% in Q1FY27 vs 14.4% in Q1FY26 and 8.0% in Q4FY26. The QoQ improvement was partly aided by a lower tax rate of 25% in Q1FY27 vs 41% in Q4FY26
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