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Anand Rathi
Gujarat Fluorochemicals (Buy)
CMP: ₹850.85
Target: ₹1,133
Gujarat Fluorochemicals (GFLC) has reported a growth of 27.9 per cent in its standalone revenues at ₹6,737 million in Q3-FY19 as against ₹5,268 million in Q3-FY18. The growth was mainly driven by strong performance in PTFE business (44 per cent growth), CMS Sales (40 per cent growth) followed by growth in HCFC (9 per cent) and value added products segment (85 per cent) while Chlor-Alkali business witnessed marginal de-growth of 5.4 per cent mainly on account of decline in prices.
On profitability front, the company has reported operating margins of 30.1 per cent at₹2,027 million in Q3-FY19 as against 28.2 per cent at ₹1,485 million in Q3-FY18, an improvement of about 190 basis points. The improvement in margins was due to better realisations and better product mix on account of improvement in value chain for its products. The company’s profit after tax (PAT) margins for the quarter stood 16.7 per cent at ₹1,125 million as against 18 per cent at ₹947 million in Q3-FY18.
· We believe GFLC is on path to create a niche for itself in its fluorochemicals business and is better poised to explore markets for more value added products while continue to gain from its other diversified businesses.
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