Gujarat Fluorochemicals Targeted for Rs 3478 by Prabhudas Lilladher

Gujarat Fluorochemicals Posts Strong Q4FY26 Results

Gujarat Fluorochemicals (FLUOROCHEM) has reported consolidated revenue from operations of Rs13.6 billion in Q4FY26, marking a significant growth of 11.8% year-over-year (YoY) and 20.5% quarter-over-quarter (QoQ). The Fluoropolymers segment witnessed a notable increase of 19% YoY, driven by higher volumes and improved realizations across key products.

The company's existing capacities are operating at optimal utilization levels, and a previously announced Rs2.5 billion capital expenditure (capex) will further support the expansion of its new fluoropolymer portfolio. This move is expected to drive growth in the near term, particularly in the semiconductor, electric vehicles (EVs)/Battery Energy Storage System (BESS), and clean energy sectors.

In contrast, the Fluorochemicals segment recorded a decline of 2% YoY, but grew 63% QoQ, thanks to a favorable pricing environment. The company also commenced production and sales of R32 in March'26. The Bulk Chemicals segment achieved 1% YoY growth, but saw a decline of 3% sequentially.

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The Battery Chemicals segment contributed Rs150 million to revenue during the quarter, with management indicating FY27 and FY28 as key growth years. However, we believe that the Fluoropolymers business will remain the primary growth driver, while the Battery Chemicals segment may take longer to make a meaningful contribution to the topline, with LiPF₆ likely to be the only significant revenue contributor in FY27.

Financial Projections

The stock is currently trading at 53x FY28E EPS. Based on our valuation, we assign a value of 49x FY28E EPS and arrive at a target price of Rs3,478. Consequently, we downgrade our rating on the stock to REDUCE.

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Recommendation

We believe that investors should exercise caution and reduce their exposure to Gujarat Fluorochemicals, given the current valuation and growth prospects.