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ICICI Securities Report
Gujarat Fluorochemicals Ltd. remained in focus after the brokerage firm ICICI Securities raised its target price to Rs 4,250 from Rs 3,870, but downgraded the stock to Add from Buy, citing limited upside following recent gains.
The revised target implies a potential upside of around 12% from the current market price.
The brokerage maintained a constructive long-term outlook on the company, supported by improving visibility in its emerging EV battery chemicals business and steady growth in fluoropolymers. However, near-term margin pressures and earnings adjustments led to the rating downgrade.
Gujarat Fluorochemicals' Q4 FY26 Ebitda was lower on higher losses in EV; core business Ebitda was broadly in line. It expects fluoropolymers volumes to grow 15-20% in FY27, and has taken price hikes to offset inflation and protect Ebitda. Gujarat Fluorochemicals expects growth in fluoropolymers to continue and is investing Rs 250 crore to enhance capacities.
It has commenced a 10ktpa R-32 plant, and expects to double capacities in H2 FY27. Gujarat Fluorochemicals has contracted its entire LiPF6 and LFP plant capacities and may commence supplies in FY27.
The brokerage cuts earnings per share for FY27/28E by 5-7% as we factor in costs for GFCL EV, while no material revenue is projected.
The brokerage raised its target price to Rs 4,250 (vs Rs 3,870), valuing Gujarat Fluorochemicals at an FY28E P/E multiple of 38x (vs. 32x)—a premium for rising visibility for GFCL EV, although we do not estimate material revenue.
Hence the brokerage downgrades Gujarat Fluorochemicals stock to Add from Buy.
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