Buy Gujarat Fluorochemicals; target of Rs 4160: ICICI Securities

Gujarat Fluorochemicals (GFL) is at the cusp of inflection in earnings growth with revenue / EBITDA / PAT CAGR estimated at 20.4%/ 33.4%/ 46% over FY25-27E. The quality of earnings may also be better with fluoropolymers contributing 67% / 70% to incremental revenue/ EBITDA. Fluoropolymers business has tailwinds from industry consolidation, destocking impact creating a low base in past two years, rise in demand particularly in India, and limited capacity addition by the remaining western players. GFL has added large capacity which should aid in winning market share. Ref-gas should benefit from tight-supply situation; R-32 capacity could commission in FY27E. Our assumption under appreciates battery chemicals potential; we see healthy balance sheet and return ratios. Maintain BUY.

Outlook

We keep our estimates unchanged, and target price of INR 4,160 (30x FY28E); implied valuation of 38.5x FY27E EPS. Maintain BUY. Our EPS estimates does not include benefit of INR 10bn equity raised which will reduce debt and interest expenses.

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