Guj Fluoro stock zooms 21% in 2 days; nears 52-week high on growth optimism

Shares of Gujarat Fluorochemicals (GFL) hit an eight-month high of Rs 3,837.70, as they rallied 9 per cent on the BSE in Friday’s intra-day trade on hopes of improvement in the business outlook. 

In the past two weeks, the stock of specialty chemicals has zoomed 21 per cent. It was trading at its highest level since January 2024 and was seen inching towards its 52-week high of Rs 3,920, hit on January 3. In comparison, the BSE Sensex was down 1.2 per cent at 81,235 at 02:02 pm.

GFL is engaged in manufacturing and trading of bulk chemicals, fluorochemicals, fluoropolymers and allied activities.

 

Analysts at KRChoksey Shares and Securities increased FY26E EPS to Rs 111.4 (previously: Rs 110.3) and PE multiple to 33.0x (previously: 32.0x), reflecting the positive effects of commercializing the battery chemicals segment and the growing traction of new fluoropolymers, driven by strong growth in the semiconductor industry and advancements in emission control applications. The stock, however, was trading above the brokerage firm’s target price of Rs 3,675 per share.

In Q1FY25, GFL’s earnings missed analyst’s estimates. The Fluoropolymers vertical showcased YoY growth with the Bulk Chemicals segment up marginally. The Fluorochemicals segment lagged due to headwinds from Chinese competition. However, the management is confident about the coming quarters and expects a better performance in H2FY25E. The company also anticipates gaining market share in the high-value segment and has also highlighted that de-stocking is now behind. In terms of pricing, FLUOROCH expects an improvement in pricing from January 2025.

GFL in its FY24 annual report said, in the midst of a rapidly shifting industrial landscape, the burgeoning transformation of the automobile industry, coupled with surging demand in the electronics, electrical, and coatings sectors, heralds an instrumental role for fluoropolymers in defining the future trajectory of global industrial growth. The supportive government initiatives, including the ‘National Chemical and Petrochemical Policy’ are pivotal in fostering the R&D, innovation, and manufacturing in the fluoropolymer industry.

With a strategic vision to propel industrial manufacturing by 2030, the government initiatives place a sharp focus on critical sectors, such as electronics, renewable energy equipment, electric vehicles (EVs), energy storage system (ESS), fuel cell membranes and green hydrogen.

Notably, all these industries are reliant on fluoropolymers as their essential performance raw materials significantly ramping up the growth of the market. This synergy of government support and industrial demand sets the stage for an accelerated growth of the Indian fluoropolymer market in the coming years, GFL said.

GFL is strategically poised for global dominance in the battery materials sector through GFCL EV, wholly-owned subsidiary. GFCL EV is involved in the manufacturing of critical intermediate materials for lithium-ion batteries. The EV segment is anticipated to tap significant opportunities within the electric vehicles and energy storage systems worldwide in the coming decades. The fully integrated battery materials complex in Jolva, Gujarat has already established its initial capacity.

The Fluoropolymers segment showed sequential growth, though revenue for the quarter was impacted by the Red Sea crisis. The segment's contribution is expected to increase QoQ, especially in the second half of FY25. Demand for refrigerants surged, leading to improved volumes and prices, particularly for R-22, said analysts at Prabhudas Lilladher in the Q1 result update.

However, continued dumping from China resulted in muted demand for the Specialty segment. Even though caustic soda prices improved slightly, the Bulk Chemicals segment saw a 4 per cent sequential decline in revenue due to ongoing softness in MDC prices. On a positive note, progress in the Battery Chemicals vertical is promising. The LiPF6 plant has already been commissioned, with commercial sales expected to begin in Q4FY25, upon customer approval, the brokerage firm said.