FLUOROCHEM - Gujarat Fluorochemicals Limited Share Price

During the conference call on February 12, 2026, management provided an optimistic outlook for Gujarat Fluorochemicals Limited (GFL) despite recent challenges. Here are the major forward-looking points highlighted by management:

1. Tariff Reduction: The management acknowledged the recent decrease in U.S. tariffs from 50% to 18%, which enhances competitiveness in critical export markets and is expected to facilitate a volume recovery, better pricing stability, and margin expansion.

2. Demand Growth: Continued strong demand is anticipated in the fluoropolymers segment, particularly from the semiconductor sector, where significant global investments are being made. The management is confident that FY 2027 will witness healthy revenue growth driven by this vertical.

3. Battery Materials Segment: The investment of Rs. 430 crores from the International Finance Corporation in the company's battery materials subsidiary is seen as an endorsement of GFL's strategy. Additionally, another sovereign fund is expected to invest $82 million in this segment. An advanced battery materials project in Oman worth $216 million is also underway.

4. Production Capacity for R-32: GFL aims to ramp up the R-32 production capacity to 20,000 tonnes, although this has faced some delays. Production is now expected to commence by the end of FY 2026, with the goal of full production by December 2027.

5. Financial Performance Metrics: For Q3 FY 2026, consolidated revenue was reported at Rs. 1,136 crores, with an EBITDA of Rs. 275 crores. Despite a slight decline in revenue, management remains positive about recovery in profitability as seasonal demand normalizes.

6. Working Capital Management: The goal is to bring down the working capital days to about 170-180 days from the current 201 days.

In summary, management expresses strong confidence in recovery and growth across various segments, particularly in battery materials and fluoropolymers, supported by strategic investments and favorable market conditions.

Question 1: What is the capacity we have started with for R-32, what is our utilization, and what is the final capacity intended by December 2027?

Bir Kapoor: We are targeting to ramp up to 20,000 tonnes in R-32 capacity, delayed by a quarter due to safety audits. Production has started now, and we anticipate achieving this capacity by December 2027. We aim to expand to our quota limit, potentially up to 30,000 tonnes long-term.

Question 2: How should we look at margin given the continued decline in R-22 prices?

Bir Kapoor: The drop in R-22 prices impacts margins negatively due to low realizations. However, we believe that with R-32 coming online and improving market conditions, we can see positive improvements in the refrigerant sector moving forward.

Question 3: What is the outlook for fluoropolymers growth, considering industry changes?

Bir Kapoor: While growth has been 14%, external factors like the rejection of antidumping duties and tariffs have hindered expectations. However, we remain optimistic as we see increasing demand from various sectors, particularly semiconductors and automotive.

Question 4: What is causing the increase in inventory days?

Bir Kapoor: Increased inventory arises from cautious ordering and holiday slowdowns in international markets. We anticipated orders that did not materialize as expected. We're targeting a reduction to 170-180 days of working capital in the future, with signs of inventory normalization.

Question 5: What are the revenue and capacity expectations for battery chemicals in FY 2027?

Bir Kapoor: We expect 2027 to be a growth year, especially from LiPF6 sales, with early revenues anticipated. LFP and electrolyte revenues may materialize as customer qualifications progress, contributing to overall capacity utilization and revenue growth.

Question 6: What is the forecast for fluoropolymers and how is the customer transition going?

Bir Kapoor: Customer transition is steady, influenced by inventory liquidations from legacy players. Current barriers are easing, and with tariff reductions, we're confident of reclaiming growth momentum, allowing for anticipated quarterly progress.

Question 7: How are raw material factors, like those in Oman, influencing your operations?

Bir Kapoor: Oman presents strategic advantages like tariff benefits and lower energy costs. Although raw material availability isn't immediate, the area's evolving ecosystem is set for long-term benefits, supporting our supply chain goals globally.

Question 8: How is the EV product subsidiary progressing towards revenue growth?

Rajiv Rao: We expect significant revenue growth from LiPF6 and binders in FY 2027. With approvals in place and trials ongoing, our capacity is geared toward global markets, focused primarily on the U.S. and EU, while also looking to increase domestic presence gradually.