Gujarat Fluorochemicals Limited — Q1 FY26 earnings call

Call held 5 Aug 2025

Management summary

Gujarat Fluorochemicals Limited reported a strong Q1 FY26, with consolidated revenue up 5% YoY to ₹1,281 crores and PAT increasing 70% YoY to ₹184 crores. The Chemical segment led this growth, showing a 9% revenue increase and a 33% EBITDA surge. The company commenced R32 commercial production ahead of schedule and expects its fluoropolymer business to grow 25% by year-end, driven by new product qualifications. The Battery Chemicals segment is poised for significant ramp-up, especially with US subsidies for energy storage and supply chain diversification.

Highlights

  • Consolidated revenue from operations stood at ₹1,281 crores, reflecting a 5% year-on-year increase.

  • Consolidated PAT increased to ₹184 crores, making a 70% year-on-year growth.

  • Chemical segment reported a 9% year-on-year increase in revenue to ₹1,280 crores.

  • Chemical segment EBITDA grew by 33% year-on-year to ₹354 crores, with EBITDA margin expanding by 495 basis points to 28%.

  • Commercial production of R32 started in Q2 FY26, several quarters ahead of schedule, with a target to ramp up to 20,000 metric tons by end of FY26.

Concerns

  • Bulk Chemicals segment saw a slight decline in revenue during the quarter, mainly due to lower caustic soda prices and a planned CMS plant shutdown.

  • New US tariffs of 25% apply to a few new fluoropolymers, though management expects to negotiate prices and believes demand is inelastic.

Key financials

  1. Consolidated Revenue ₹1,281 Cr +5%YoY
  2. Consolidated EBITDA ₹344 Cr +31%YoY
  3. Consolidated EBITDA Margin 27%
  4. Consolidated PAT ₹184 Cr +70%YoY
  5. Chemical Segment Revenue ₹1,280 Cr +9%YoY
  6. Chemical Segment EBITDA ₹354 Cr +33%YoY
  7. Chemical Segment EBITDA Margin 28%
  8. Chemical Segment PAT ₹196 Cr +69%YoY

What they filed

Q1 FY27: revenue up 10.9%, net profit up 8.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,199 1,123 1,158 1,174 1,131 −6%1,026 −9%1,211 +5%1,302 +11%
EBITDA298 307 287 333 360 +21%286 −7%335 +17%365 +10%
Net profit144 153 167 185 195 +35%127 −17%171 +2%201 +9%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Fluoropolymer Business
    — Revenue
  • Fluorochemicals Business
    — R32 Commercial Production
  • Specialty Chemicals Segment
    — Performance
  • Bulk Chemicals Segment
    — Revenue
  • Battery Chemicals Segment
    — Performance

Capital allocation

high confidence
  • Capex ₹1,200 Cr
    • EV part (additional investment) ₹1,200 Cr
    • Renewable energy (equity investment till date) ₹190 Cr
    • Fluoropolymer capacity expansion
    • PVDF capacity for EV products/binders
    I am sorry. See, we had already indicated that we have invested close to Rs. 1,300 crores in EV till the last financial year, and we are planning to add another Rs. 1,200 crores in this financial year going forward. And it remains as per the plan. So, there is no change in the EV plan as of now.
  • Liquidity Liquidity disclosed Working capital reduced from 188 days to 172 days in this quarter.
    The management is focused on working capital reduction; and thereby, the working capital has reduced from 188 days to 172 days in this quarter, and efforts are on to further reduce over the next few quarters.

Guidance & targets

Fluoropolymer Business

  • Growth Fluoropolymer Business · by the time we complete this financial year (FY26) · High confidence 25%
    Rehan, we have already stated that we expect the fluoropolymer business to achieve a growth of 25%, and we see that happening probably by the time we complete this financial year. And we expect this revenue growth to continue quarter by quarter.

    — Bir Kapoor

  • Capacity Utilization Fluoropolymer Business · by the end of this financial year (FY26) · High confidence Optimal utilization levels
    The capacity which we have added in new Fluoropolymer segments over the past few years are expected to reach optimal utilization levels by the end of this financial year.

    — Bir Kapoor

Fluorochemicals Business

  • R32 Commercial Production Start Fluorochemicals Business · Q2 FY26 · High confidence Q2 FY26
    In our Fluorochemicals business segment, we are excited to announce the start of commercial production of R32 in Q2 FY '26, which is several quarters ahead of schedule.

    — Bir Kapoor

  • R32 Capacity Fluorochemicals Business · by the end of this financial year (FY26) · High confidence 20,000 metric tons
    We aim to ramp up our R32 capacity to 20,000 metric tons in phases by the end of this financial year.

    — Bir Kapoor

  • R32 Capacity (First Phase) Fluorochemicals Business · going forward · Medium confidence Upward to 10,000 tons
    So, Sanjesh, it will not be appropriate for me to give the exact capacity now. But of course, it's in upward to 10,000 that we had indicated. And we will slowly ramp it up going forward.

    — Bir Kapoor

  • R32 Capacity Utilization Fluorochemicals Business · next few quarters after that · Medium confidence Happen quickly
    Looking at the market situation, we expect that to happen quickly. However, I mean, we cannot really say, but probably next few quarters after that.

    — Bir Kapoor

Battery Chemicals Business

  • PVDF Binder Qualifications Battery Chemicals Business · by the end of this calendar year · High confidence Complete
    And we expect the qualifications to be complete by the end of this calendar year.

    — Bir Kapoor

  • Sales Trickling In Battery Chemicals Business · by the second half of this year · High confidence Start
    We expect the sales from the EV business to start trickling in by the second half of this year.

    — Bir Kapoor

  • Meaningful Sales Numbers Battery Chemicals Business · perhaps in FY '27 · Medium confidence More meaningful numbers
    But we will start seeing more meaningful numbers perhaps in FY '27, okay, which we will start seeing the full impact of the capacity that we have set up, okay?

    — Bir Kapoor

Renewable Energy Project

  • Savings Accrual Renewable Energy Project · from Q3 · High confidence Start accruing
    So, the saving will start accruing from Q3. So, basically, it will come in stages. So, I think the first installation will happen in Q3.

    — Akhil Jindal

  • Full Benefit Realization Renewable Energy Project · FY '27 · High confidence Full benefit available
    That's right. So, FY '27 will be the first year of full operation, so the full benefit will be available in that year, you are right.

    — Akhil Jindal

Operating Expenses

  • Other Operating Expenses Operating Expenses · going ahead · Medium confidence Continue to be in the same range
    Of course, there will be a natural increase in the expenses over time. But of course, when you say sustainable, it will not go back to Rs. 244 crores. There will be some minor increase, which will appear in the other expenses, but continue to be in the same range.

    — Bir Kapoor

What to watch in Q2 FY26

Fluoropolymer business growth

Next quarter / by end of FY26
Current Q1 FY26 not 25%, but management expects 25% by FY26 end
Target Progress towards 25% YoY growth

Why it matters

This is a core business segment, and achieving the stated growth target is crucial for overall performance.

we expect the fluoropolymer business to achieve a growth of 25%, and we see that happening probably by the time we complete this financial year. And we expect this revenue growth to continue quarter by quarter.

Risks & concerns

  • US Tariffs on new fluoropolymers

    medium

    Additional 15% duty (total 25%) on some new fluoropolymers, but PTFE, micro powders, and most battery materials are exempt. Management expects to negotiate prices and continue business due to specialized applications and inelastic demand.

    Both downplayed

  • R32 pricing volatility

    low

    Analyst raised concern about R32 prices normalizing to lower levels seen with R125. Management stated R32 fundamentals are different, with supply constraints supporting current price levels.

    Both downplayed

Q&A highlights

5 direct, 1 evasive
Fluoropolymer growth sustainability and US tariff impact on new products Direct
we expect the fluoropolymer business to achieve a growth of 25%, and we see that happening probably by the time we complete this financial year... The PTFE and micro powders are part of it and majority of the battery materials are part of the list, it's exempted from the reciprocal duty list. New polymers are indeed part of it, but there's a certain level of their stickiness to that business.

Clarifies management's confidence in achieving its 25% fluoropolymer growth target despite US tariffs, citing product specialization and exemptions for key products, and the ability to pass on costs.

Asked by Rehan Saiyyed (Trinetra Asset Managers), Sanjesh Jain (ICICI Securities)

R32 capacity ramp-up, utilization, and pricing outlook Direct
We aim to ramp up our R32 capacity to 20,000 metric tons in phases by the end of this financial year... Everything will come as a retrofit... we expect the price to remain in the same range... R32 fundamentals of where the R32 pricing are very different.

Provides specific capacity targets and timeline for R32, clarifies the retrofit approach, and offers management's view on pricing stability, differentiating it from past refrigerant price volatility.

Asked by Sanjesh Jain (ICICI Securities), Krishan Parwani (JM Financial), Lavanya (UBS)

Battery Chemicals business pivot to energy storage and US subsidies Direct
This segment is emerging as a cornerstone of our future growth... US bill... included ESS also as a part of the subsidy in US manufacturing... input materials or the direct cost attributed for making batteries in US 85% or up to 85% of that cost has to be outside the PFE.

Highlights the strategic importance of the battery chemicals segment, the significant tailwinds from US policy, and the expected ramp-up timeline, indicating a major future growth driver.

Asked by Nitin Agarwal (DAM Capital), Archit Joshi (Nuvama Wealth)

Renewable energy project investment and financial benefits timeline Direct
We have invested close to Rs. 190 crores till date as an equity... the saving will start accruing from Q3... FY '27 will be the first year of full operation, so the full benefit will be available in that year.

Details the investment in renewable energy, its scale, and the specific timeline for realizing cost savings, which will positively impact profitability.

Asked by Ankur Periwal (Axis Capital)

Segmental EBITDA margins disclosure Evasive
Yes, Meghna, we do not give segmental EBITDA margins or EBITDA, that we have not been providing.

Indicates a lack of granular profitability data for individual segments, which analysts typically seek for deeper valuation and performance analysis.

Asked by Meghna Agarwal (Mount Intra)

Evaluation of manufacturing facility through JVs in United States Direct
No, we are right now not looking at US or any JV like that... because we have a very integrated facility in India right now... We do not see that happening if we move far away from this integrated facilities that we have.

Clarifies the company's current strategy of focusing on integrated Indian manufacturing for fluoropolymers, ruling out immediate plans for US JVs despite supply chain diversification trends.

Asked by Pratik Oza (Systematix)

3 min read 6 chapters

Detailed narrative

Consolidated & Chemical Segment Performance Highlights

Gujarat Fluorochemicals reported a robust Q1 FY26, with consolidated revenue increasing 5% year-on-year to ₹1,281 crores and PAT surging 70% year-on-year to ₹184 crores. The consolidated EBITDA grew 31% to ₹344 crores, expanding margins to 27% from 22% in Q1 FY25. The Chemical segment was a key driver, with revenue up 9% YoY to ₹1,280 crores, EBITDA growing 33% YoY to ₹354 crores, and PAT increasing 69% YoY to ₹196 crores. Working capital days were reduced from 188 to 172 days, reflecting management's focus on efficiency.

Fluoropolymer Business Growth and Outlook

The fluoropolymer segment achieved its highest-ever quarterly revenue and is targeted to grow 25% by the end of FY26, with optimal capacity utilization expected by the same period. This growth is driven by new polymer sales volumes and approved qualifications for high-end applications in sectors like semicon, aerospace, and automobiles. Management expressed confidence in sustaining this growth momentum quarter-on-quarter, noting that demand for specialized new fluoropolymers is inelastic to price changes.

Fluorochemicals Business: R32 Commercialization Ahead of Schedule

The company commenced commercial production of R32 in Q2 FY26, several quarters ahead of schedule, achieved through strategic retrofitting with minimal capital expenditure. GFL aims to ramp up R32 capacity to 20,000 metric tons by the end of FY26, contributing to a complete range of refrigerant products including R22, R32, R125, and R410. Management expects R32 capacity utilization to happen quickly and believes pricing will remain stable due to unique market fundamentals and supply constraints.

Battery Chemicals: Strategic Growth and US Policy Tailwinds

The Battery Chemicals segment is identified as a cornerstone for future growth, benefiting from global demand for battery energy storage, AI/ML workloads, and EV infrastructure. US subsidies of $45 per kilowatt-hour for battery manufacturing, coupled with supply chain diversification requirements (85% non-PFE inputs), present a significant opportunity. The company has operational electrolyte and salt plants, and its LFP CAM plant has completed pre-commissioning, with sales expected to trickle in by H2 FY26 and show meaningful numbers in FY27.

Capital Expenditure and Renewable Energy Initiatives

GFL has invested approximately ₹1,300 crores in the EV segment until the last financial year and plans to add another ₹1,200 crores in FY26. The company has also invested ₹190 crores in equity for a 450-megawatt renewable energy project, with savings expected to accrue from Q3 FY26 and full benefits realized in FY27. PVDF capacity for EV binders is in place, with qualifications anticipated to be complete by the end of the calendar year, supporting the growing battery materials business.

US Tariff Impact and Integrated Manufacturing Strategy

While new US tariffs of 25% apply to a few new fluoropolymers, management believes the impact will not be significant due to the specialized nature and inelastic demand for these products, and exemptions for PTFE, micro powders, and most battery materials. The company emphasized its focus on its highly integrated manufacturing facility in India for fluoropolymers, stating it is not currently evaluating JVs or manufacturing facilities in the US, as its Indian operations are optimized for cost and processes.

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