Gujarat Fluorochemicals Share Price In Focus After JM Financials Initiates Coverage: Buy, Sell Or Hold?

Shares of Gujarat Fluorochemicals will be in focus during the market session today (July 14), after domestic brokerage JM Financials initiated coverage on the chemical stock with a 'hold' rating. The brokerage has identified multiple 'growth levers' that will likely drive the company's top line over FY25-28.

Gujarat Fluorochemicals Ltd. is among the leading players in the chemical industry, with over 37 years of expertise in fluorine chemistry. It offers a wide range of products across fluoropolymers, refrigerants, fluorospecialty, and industrial chemicals, and it is now expanding into battery chemicals.

1. Growth Levers: According to JM Financials, GFL’s growth will be driven by multiple growth levers across its diverse businesses. The ramp-up of its new fluoropolymer volumes and improvement in PTFE (fluoropolymer) utilisation and product mix are expected to drive its topline over the near term.

2. Margin growth: With an increase in high-realisation new fluoropolymer and value-added PTFE volumes along with high-margin HFC-32 volume off-take, the company is set to see margin improvement. The new HFC-32 capacity and battery chemicals capex are expected to fuel the medium- to long-term growth in the top line.

3. Revenue/PAT CAGR: GFL's revenue/EBITDA/PAT CAGR is expected at ~23%/27%/27%: "We expect GFL’s revenue to register a CAGR of ~23% over FY25-28E and reach Rs 87.3 billion by FY28E on the back of ramp-up of fluoropolymer capacity utilisation, HFC-32 volume off-take, and revenues from battery chemical sales," said the brokerage. PAT is likely to grow from Rs 5.5 billion to Rs 11.1 billion over FY25-28E, at ~26.6% CAGR.

4. Ebitda Growth: With EBITDA margins increasing from ~24% to ~27% over the same period, driven by improvements in product mix and operating leverage benefits. GFL’s EBITDA is expected to grow from Rs 11.6 billion in FY25 to Rs 23.5 billion in FY28E, at a CAGR of ~27% over FY25-28E.

5. Key Risks: Underwhelming ramp-up/offtake of new fluoropolymer volumes; potential delay in commissioning of battery chemical capacities; and less-than-expected value-added PTFE (fluoropolymers) volume offtake and competitive pressure in commodity PTFEs.

JM Financials said it initiated coverage on the stock with a HOLD and Sep’26 target price (TP) of Rs 3,600 per share: GFL, with multiple growth levers across its product portfolio, is well set for robust growth over FY25-28E. Building in strong earnings growth, especially from the battery chemicals vertical, there remains little room for disappointment on execution.

"In our view, the current valuation of 37x Sep’27E EPS appears rich, providing no margin of safety. We initiate coverage on Gujarat Fluorochemicals with a HOLD rating and Sep’26 TP of Rs 3,600/share (implied target 39x Sep’27 EPS)," said JM Financials on Gujarat Fluorochemicals.

Shares of Gujarat Fluorochemicals last settled 0.72% lower at Rs 3,390 apiece on the BSE. The chemical major commands a market cap of Rs 37,165.55 crore. The stock has shed over 6% in one month and nearly 20% on a year-to-date (YTD) basis.

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