Gujarat Fluorochemicals’ Q2 revenue stood at Rs 12.1 billion (+2% YoY/ -6% QoQ). Fluoropolymers revenue at Rs 7.6 billion (+8% YoY/-4% QoQ) as US tariffs led to a sequential decline.
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Gujarat Fluorochemicals Ltd.'s Q2 revenue came below estimates on account of tariff impact although Ebitda margin improved 530 bps YoY/ 323 bps QoQ to 30.1% led by improving sales mix and cost initiatives.
U.S. tariff situation has temporarily impacted the fluoropolymers segment, but recovery is expected through market diversification and potential US tariff reversal.
Fluorochemicals segment, mainly R22, was affected by quota reduction. Upcoming 20ktpa R-32 capacity by FY26 end, ramp-up of the EV business, and expansion of valueadded new fluoropolymers are expected to drive sustainable growth.
We fine-tune our estimates and raise FY26/27/28E EPS by 6/5/4%, respectively to factor in improved Ebitda margins (guidance of ~30%) owing to a better product mix and cost optimization initiatives, coupled with lower interest costs due to a decline in gross debt.
We maintain our ‘Accumulate’ rating and value the stock on SoTP-based 1-YF target price of Rs 3,875, valuing the base business at 18x EV/Ebitda and the battery chemicals business at 20 times.
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