The Hindu Business Line : Shift in biz focus drives up Gujarat Fluorochemicals

THE Gujarat Fluorochemicals stock today created its new 52-week peak at Rs 416 on the bourses. A section of market players is consistently adding premium to the stock in view of gradual transformation of its business.

The production of chlorofluorocarbon or CFC, the company's main product, is being phased out internationally and a complete halt is slated by 2009 under the Montreal Protocol.

In line with the global trend, the company is reducing it CFC production and replacing it with hydro-chlorofluorocarbon (HCFC). In this endeavour, the company recently has made a progress by way of registration of its industrial clean development mechanism (CDM) by the Kyoto Protocol committee.

Mr Pradip Hotchandani of Anagram Stockbroing said this is understood to be the world's first such project to be registered by the empowered authority. The CDM project reportedly was developed by Gujarat Fluorochemicals in technical collaboration with Ineos Fluor, a British company.

"The registration will mean that the production of HCFC 22 refrigerants at the company's plant will reduce emission of an ozone-depleting toxic gas - HFC 23 - to a permissible level. This, in turn, seemingly ensures continuation of production of safer refrigerants by the company in future," Mr Hotchandani observed.

Gujarat Fluorochemicals has also entered a new area of family entertainment through its wholly owned subsidiary, Inox Leisure Ltd. It has invested Rs 45 crore in Inox, which has already set up a chain of 4 multiplexes in the country. Inox, which expects to complete another 5 multiplexes within next few months, reported a profit of Rs 2.5 crore over a turnover of Rs 30 crore in 2003-04.

According to Mr Rajesh Agarwal of CD Equisearch, as multiplex culture is fast catching up in urban centres, the company is better placed to take advantage of the new and growing business segment.

Inox has spread its wings out of Vadodara, where the Gujarat Fluorochemicals plant is located, to Pune, Mumbai, Kolkata and Goa.

According to some analysts, however, the Gujarat Fluoro stock has had a very strong run up and a further upside in valuation is linked to implementation of its business transformation projects.

The stock appreciated today by 5 per cent and in the last six sessions has gained 34 per cent. At today's closing price, it traded 9 times its trailing four-quarter EPS of Rs 43.

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