Tanfac Inds.

Tanfac Industries achieved its highest ever quarterly revenue of INR 193 crores in Q4 FY26 and a record full-year revenue of INR 711 crores for FY26, representing a robust 27.6% year-on-year growth from INR 557 crores in FY25. Despite this top-line performance, the company experienced a decline in profitability, with EBITDA margin contracting to 16% in FY26 from 23% in FY25, and PAT falling to INR 70 crores from INR 88 crores. This was primarily attributed to the normalization of margins, increased raw material costs, and higher depreciation expenses.

The company successfully completed significant capacity expansions, doubling its hydrofluoric acid capacity from 15,000 MTPA to 30,000 MTPA with a capital investment of approximately INR 100 crores. A major milestone was the commissioning of a 20,000 MTPA solar grade DHF project, establishing Tanfac as the first and only manufacturer of this product in India. These expansions reinforce Tanfac's position in high-growth sectors like solar photovoltaic and semiconductors, leveraging its integrated fluorochemical manufacturing platform.

Tanfac is making a strategic entry into the refrigerant gases segment with a planned capital expenditure of INR 495 crores, of which INR 405 crores is specifically for HFC-32. This investment will establish a 20,000 MTPA downstream fluorinated products manufacturing facility, expected to be commissioned by Q3 FY27. This move targets the rapidly growing global HFC-32 market, projected to reach 485 KT by 2030, and India's demand, which is anticipated to double to 45-50 KT in the next 4-5 years. The company has already secured contracts covering 65% of this proposed capacity.

The company has built a substantial order book, securing approximately INR 1,068 crores in solar grade DHF orders expected to be executed over the next 3.5 years. Additionally, long-term supplier arrangements for fluorinated products aggregate to INR 3,612 crores over a period of 5 to 7 years. These contracts provide strong revenue visibility and underscore customer confidence in Tanfac's capabilities and product quality. Management aims to achieve INR 1,600-2,000 crores in revenue by FY28 and INR 3,000-3,500 crores in the next five years.

Raw material costs, particularly for sulphur, increased from INR 30/kg in FY25 to INR 38-40/kg in FY26, primarily due to geopolitical factors in the West Asian region. While Tanfac passes on 100% of these cost increases to customers, there is a typical lag of 30-45 days. Management anticipates EBITDA margins to stabilize in the 15-18% range for existing businesses, with a potential 3-4% increase in margins once revenues from the new R-32 plant start contributing in the last quarter of the year.

Tanfac is actively focusing its R&D efforts on developing next-generation fluorinated products, including specialty fluoropolymers, battery chemical applications, and electronic grade chemicals. This strategy aims to cater to emerging high-growth and high-profitability sectors, ensuring a diversified product portfolio. The company also plans to strengthen backward integration capabilities through the expansion of HF and Sulphuric acid capacities to support its HFC-32 production.