Hold Gujarat Fluorochemicals; target of Rs 3580: Prabhudas Lilladher

hold

Prabhudas Lilladher's research report on Gujarat Fluorochemicals

FLUOROCH reported consolidated revenue from operations of Rs12.8bn, marking an increase of 8.9% YoY and 4.6% QoQ. The topline growth was driven by the Fluoropolymers segment, which grew 16% YoY and 12% QoQ, supported by higher volumes and a favorable product mix. This segment is expected to grow ~25% in FY26, aided by the exit of a key global player from Dec’24. The Fluorochemicals segment delivered a modest 2% YoY growth, but declined 7% sequentially, due to lower sales of R410A and R125 in the USA. However, R22 prices rose during the quarter and are expected to remain elevated due to global production quota cuts. FLUOROCH also commercialized its R32 capacity during Q1FY26 and aims to ramp it up to 20,000mtpa by the end of FY26. The Bulk Chemicals segment reported a 12% YoY decline, impacted by lower caustic soda prices and planned shutdown of the CMS unit. The Battery Chemicals segment is expected to begin contributing to revenue from H2FY26, with meaningful ramp-up from FY27. Product validation is currently at an advanced stage. Going forward, overall growth will be driven by the Fluoropolymers segment, rising refrigerant prices, and commencement of the Battery Chemicals business. The stock is currently trading at 47x FY27 P/E. Upgrade to ‘HOLD’ rating.

Outlook

Following the recent price correction and commercialization of R32 ahead of schedule, we upgrade the stock to ‘HOLD’ with a revised target price of Rs3,580, valuing it at 48x FY27E EPS.

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Gujarat Fluorochemicals - 06082025 - prabhu