Gujarat Fluorochemicals Q3 Results Review - On The Path To Recovery: DRChoksey

DRChoksey Research Report

Gujarat Fluorochemicals Ltd. registered a strong quarter with revenue and margins expanding on a QoQ basis after three consecutive quarters of deceleration QoQ. Although fluoropolymers saw a decline, the growth in fluorochemicals and bulk chemicals was promising, in our view.

We believe that the destocking from China is largely over, which should lead to strong top-line growth over the next couple of years.

Furthermore, Gujarat Fluorochemicals’ expansion in electric vehicle/ESS battery segment comes at a right time as the industry is expected to grow at an astronomical rate.

We remain positive on the long-term prospects of the Company. Currently, the stock is trading at 85.6 times/ 36.5 times/28.1 times FY24E/FY25E/FY26E earnings per share, respectively.

We introduce FY26E EPS of Rs 127.4 and assign a PE multiple of 30.5 times to arrive at a target price of Rs 3,884 (Rs 2,988 previously).

Given the 8.6% upside from current levels, we retain our 'Accumulate' rating on Gujarat Fluorochemicals.

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