Gujarat Fluorochemicals (GFL) reported its Q3FY23 earnings on February 7, and the results were on expected lines and met consensus expectations. The company reported revenue and EPS growth of 41/64 per cent YoY growth in Q3FY23 with an EBITDA margin of 37 per cent.

GFL restructured the reporting format and Bulk Chemicals (Casutic soda and chloromethane) reported a decline of 12 per cent YoY as prices were under pressure. Refrigerant gases and specialty chemicals under fluorochemicals nearly tripled from last year’s third quarter and fluoropolymers (PTFE and new fluoropolymers) reported a 41 per cent YoY growth. The net debt to equity ratio is at 0.21x.

Capex plan reaffirmed

GFL reaffirmed its capex plan of spending ₹2,500 crore in FY23-24, which spans new-age fluoropolymers, speciality chemicals including battery chemicals; refrigerant gases, and general infrastructure. The company received back ₹623 crore from Inox Wind, which was initially contracted to set up a wind power capacity for energy-intensive operations of GFL operations. The advances received were adjusted for the 20 MW capacity that will be commissioned.

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GFL’s growth continues to be pegged to new-age applications including battery chemicals, solar film semiconductors, and green hydrogen applications. The production vacuum in Europe/China on account of regulatory pressure for fluorinated production should be a tailwind for GFL which aims to modernise the process by FY23-24 in line with applicable regulations.

Amongst the new grades expected to be commercialised, PVDF grade for solar films is expected to reach the validation stage by late this year followed by PFA for semiconductor applications. LiPF6 (Lithium hexafluorophosphate) for battery chemicals should reach the commercial stage in FY24.

Facing a strong decline in prices of the commodity, GFL said that LiPF6 would be the mainstay of battery chemicals. Also, the company launched the project with a much lower threshold rate for the product than the current market price. The company also intends to develop other battery chemicals along with LiPF6.


In our bl.portfolio edition dated December 25, 2022, we had recommended a buy on GFL based on the product development in new age solutions and the fungibility of product applications made possible by the backward integrated model. The company reiterated its ability to use the price volatility in certain products to its advantage by shuffling the production of different products.

With diverse applications being developed which are in the commercial production stage with a large capital outlay, we reiterate our buy recommendation on the stock. The stock is currently trading at 22.5 times FY24 earnings, compared to 21 times at the time of the recommendation.