Gujarat Fluorochemicals Q2 Review- Near-Term Challenges Outscoring Fluoropolymer Opportunity: ICICI Securities

ICICI Securities Report

Gujarat Fluorochemicals Ltd.’s Q2 FY24 Ebitda at Rs 1.6 billion and Ebitda margin at 17.2% indicate dismal performance. Earnings were impacted by compression in gross margin, and lower absorption of fixed cost. However, we continue to like its business on two counts –

1. rising opportunity in fluoropolymers where change in industry structure can provide huge benefits for Gujarat Fluorochemical; and

2. battery solutions where company is planning to cater demand of 30-40% cell producers with integrated electrolyte facility, cathode active material and PVDF blinder.

We have cut our earnings per share estimates by 31%/13% for FY24E/ FY25E, and accordingly, cut target price to Rs 3,225 (from Rs 3,570) as our price-to-earning multiple of 25 times increased to 26 times (FY25E). Maintain 'Buy'.

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