Hold Gujarat Fluorochemicals; target of Rs 3637: Prabhudas Lilladher

Prabhudas Lilladher's research report on Gujarat Fluorochemicals

FLUOROCH reported consolidated revenue from operations of Rs12.1bn, reflecting a 2% YoY increase but a 5.5% QoQ decline. The Fluoropolymers segment grew 8% YoY but declined 4% QoQ, impacted by the tariffs imposed by the U.S. on new fluoropolymers. However, PTFE remains exempt from these tariffs. Management indicated that while the 25% growth guidance for FY26 remains achievable, tariffs may have a dampening effect on the segment’s performance. The Fluorochemicals segment declined 15% YoY and QoQ, mainly due to lower sales of R22 impacted by quota reductions and seasonality and R125, which was affected by U.S. tariffs. The company reaffirmed its target to expand R32 capacity to 20,000mtpa by the end of FY26. The Bulk Chemicals segment reported 3% YoY and 7% QoQ growth, driven by higher volumes and improved pricing in chloromethanes. The Battery Chemicals segment is expected to begin contributing to revenue from Q4 FY26, with a meaningful ramp-up from FY27.

Outlook

Assuming the U.S. tariff issues are resolved, the Fluoropolymers business is expected to lead overall growth. However, the Battery Chemicals business may take longer than anticipated to make a significant contribution to the topline. The stock is currently trading at 42x Sep’27 EPS. We value stock at 44x Sep’27 with a target price of Rs3,637 and maintain ‘HOLD’ rating.

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