Buy Gujarat Fluorochemicals; target of Rs 3225: ICICI Securities

ICICI Securities research report on Gujarat Fluorochemicals

Gujarat Fluorochemicals’ (GFL) Q2FY24 EBITDA at INR 1.6bn and EBITDA margin at 17.2% indicate dismal performance. Earnings were impacted by compression in gross margin, and lower absorption of fixed cost. However, we continue to like its business on two counts – 1) rising opportunity in fluoropolymers where change in industry structure can provide huge benefits for GFL; and 2) battery solutions where company is planning to cater demand of 30-40% cell producers with integrated electrolyte facility, cathode active material and PVDF blinder.

Outlook

We have cut our EPS estimates by 31%/13% for FY24E/ FY25E, and accordingly, cut target price to INR 3,225 (from INR 3,570) as our PE multiple of 25x increased to 26x (FY25E). Maintain BUY.

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