Gujarat Fluorochemicals core growth and battery materials scale-up drive earnings

Investment View and Valuation

In its August 13, 2026 result update on Gujarat Fluorochemicals (GFL), ICICI Direct Research retained a BUY view. The broker cited continued traction in core fluoropolymers and fluorochemicals, alongside the prospective scale-up of GFL’s advanced battery-materials business.

GFL has expanded from refrigerants into speciality chemicals, fluoropolymers, new-generation fluoropolymers and battery materials. ICICI Direct has set a target price of Rs 5,800, based on 30 times FY28E EBITDA, compared with the CMP of Rs 4,825.

Strong Q1 FY27 Operating Performance

GFL reported a strong Q1 FY27 performance, supported by healthy volumes, traction in R32 refrigerant gas and growth in new-age fluoropolymers. Revenue increased 24 per cent year-on-year to Rs 1,588 crore, while EBITDA rose 24 per cent to Rs 428 crore. EBITDA margin was flat year-on-year at 27 per cent, and PAT increased 19 per cent to Rs 219 crore. Gross margin improved by about 120 basis points year-on-year to 66.3 per cent.

Fluoropolymer Growth and Capacity Expansion

Management said fluoropolymer growth is being led by volume growth and an improving product mix rather than broad-based price increases. GFL is targeting higher-value specialty grades, which offer better realisations and margins. The company uses formula-based arrangements with key customers to pass through part of significant raw-material cost increases.

Demand is strong from semiconductors, data centres, batteries, automotive, green hydrogen and other advanced applications. Management noted rising global customer approvals and commercial volumes for specialty grades, as well as opportunities following 3M’s exit from the fluoropolymer market.

GFL reiterated its annual fluoropolymer growth target of 18–20 per cent, supported by higher-value products, customer approvals and capacity additions. Existing new-generation fluoropolymer capacity is nearing full utilisation, prompting further investment focused on higher-end grades.

Fluorochemical Capacity and Product Outlook

Existing R32 capacity of about 10,000 ktpa is effectively fully utilised. Management expects incremental R32 capacity to be commissioned in Q2 FY27 and subsequently fully utilised. Around 40–50 per cent of the R32 business may be covered by long-term contracts, with the balance sold through spot or shorter-term arrangements.

GFL is developing a brownfield R134a plant, which is expected to be commissioned within FY27, and is also expanding AHF capacity. The first AHF phase is expected around Q3 FY27 or by FY27-end. Management considers R134a attractive because alternative HFO products have substantially higher price points and future supply additions may be limited.

Battery Materials: Qualification and Scale-up

Battery materials remain at an early revenue stage but are central to ICICI Direct’s positive thesis. LiPF6 is largely qualified and entering the growth phase, PVDF is nearing qualification, and LFP and cathode active materials are progressing towards commercialisation.

Management expects battery-materials revenue to reach a three-digit quarterly run-rate by Q4 FY27 and to scale up significantly in FY28. Some Q1 FY27 dispatches made under CIF terms will be recognised in subsequent quarters. Qualification and stabilisation cycles can take about one to one-and-a-half years.

GFL has put its Oman battery-materials project on hold and is relocating the planned capacity to India, citing geopolitical factors and project delays. Oman-specific sovereign funding will not transfer automatically. The first Indian phase is planned at Jolwa/HB, followed by a Dahej site.

Capital Expenditure and Financial Estimates

Management reiterated FY27 capital expenditure of about Rs 2,300 crore for battery materials and about Rs 800 crore for chemical businesses. This follows spending of about Rs 1,900 crore during FY24–FY26. GFL continues to target cumulative battery-materials investment of Rs 6,000 crore by FY28.

Key Risks

• Delayed offtake in the fluoropolymer business.
• Delayed offtake in the battery-materials business.
• Pricing pressure in HFCs.