Gujarat Fluorochemicals Limited — Q2 FY26 earnings call

Call held 11 Nov 2025

Management summary

Gujarat Fluorochemicals Limited reported a resilient Q2 FY26 with strong EBITDA and PAT growth in its chemical segment, driven by an improved product mix and cost efficiencies. The Battery Materials business is progressing well with facility commissioning and rising LiPF6 prices, though US tariffs impacted Fluoropolymer and Fluorochemical segments. The company remains committed to its R32 capacity expansion and has a robust Capex plan for EV materials, with significant scale-up expected in FY28.

Highlights

  • Chemical segment revenue grew 2% YoY to ₹1,210 crores, demonstrating resilience amidst global challenges.

  • EBITDA increased 26% YoY to ₹381 crores, with margins expanding by 608 basis points to 32%, driven by product mix and cost optimizations.

  • Chemical segment PAT grew 51% YoY to ₹198 crores, reflecting strong bottom-line performance.

  • LiPF6 prices significantly improved from $10/kg to $17/kg, positively impacting the Battery Material business outlook.

  • LFP CAM facility successfully commissioned, with commercial sales of binders expected in H2 CY26 and Battery Materials revenue starting in Q4 FY26.

Concerns

  • Fluoropolymer revenue declined 4% QoQ due to the imposition of higher US tariffs.

  • Fluorochemical revenue declined 15% YoY due to R-22 quota reduction, seasonality, and US tariffs impacting R125 sales.

  • Working capital days have increased from 120 days to 182 days, attributed to the new Fluoropolymer business model and EV material sample manufacturing.

Key financials

  1. Chemical Segment Revenue ₹1,210 Cr +2%YoY
  2. EBITDA ₹381 Cr +26%YoY
  3. EBITDA Margin 32% +6.1%YoY
  4. Chemical Segment PAT ₹198 Cr +51%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
    8% Revenue Growth-4% Revenue Growth
  • Fluorochemical
    -15% Revenue Growth
  • Bulk Chemical
    — Revenue Growth
  • Battery Material
    17 USD/kg LiPF6 Prices10 USD/kg LiPF6 Prices (Previous)

Capital allocation

high confidence
  • Capex ₹1,200 Cr fully funded up till now, with an additional ₹200 crores term loan yet to be drawn and $125 million secured for the next 6-9 months
    • EV materials (cathode and salt side)
    This year, it is projected to be Rs. 1,200 crores in EV. One is how much would have we done in the first half? And any number for FY '27 within EV in terms of CAPEX? And where would it flow into in which of the 3 areas that you would target doing the CAPEX in FY '27? Thank you. See, the CAPEX that we had planned on EV, I think is progressing well. And we will give you a better estimate probably the end of next quarter. But the focus, of course, has been primarily on the cathode and the salt side, because those are capital intensive. And that is what our focus area is to expand on those product lines. (Archit Joshi, Bir Kapoor, Page 9) So, we are fully funded up till now for the CAPEX that we have incurred. In fact, we have almost another Rs. 200 crores of term loan that is yet to be drawn. And all the figures are as on 1st of October. So, that is being utilized for the further funding. Thus, we are expecting to close some of the sovereign fund that we discussed with you last time. So, we are fully funded for another up to $125 million, which would be incurred over next, say, 6-9 months, perhaps a year.
  • Debt Debt disclosed
    • New borrowing Term loan yet to be drawn for funding capex ₹200 Cr
    we have almost another Rs. 200 crores of term loan that is yet to be drawn.
  • Liquidity Undrawn $125 Mn Fully funded for capex over the next 6-9 months to a year.
    So, we are fully funded up till now for the CAPEX that we have incurred. In fact, we have almost another Rs. 200 crores of term loan that is yet to be drawn. And all the figures are as on 1st of October. So, that is being utilized for the further funding. Thus, we are expecting to close some of the sovereign fund that we discussed with you last time. So, we are fully funded for another up to $125 million, which would be incurred over next, say, 6-9 months, perhaps a year.

Guidance & targets

Sales

  • Fluoropolymer Sales Pickup Sales · H2 FY26, especially Q4 onwards · Medium confidence Significant pickup
    However, I believe that the second half of the year, especially Q4 and onwards, should witness significant pickup in sales.

    — Bir Kapoor

  • Battery Materials Binders Commercial Sales Sales · Second half of Calendar Year 26 · High confidence Commence
    commercial sales is expected to commence in the second half of Calendar Year 26.

    — Bir Kapoor

Growth

  • Fluoropolymer Business Growth Growth · FY26 · Medium confidence 25%
    I think we are geared toward achieving the 25%.

    — Bir Kapoor

Capacity

  • R32 Capacity Capacity · End of FY26 (March) · High confidence 20,000 tons
    And as far as 20,000 ton target is concerned, we had indicated that target by the end of this financial year, which is March. So, we will achieve there.

    — Bir Kapoor

  • R32 Maximum Entitlement Capacity Capacity · Medium confidence 30,000 tons
    Yes, our plan is to maximize and take up to the level of our entitlement, the 30,000 tons.

    — Bir Kapoor

  • R32 20,000 Tons Stabilization Capacity · 4Q of FY26 (end of this financial year, next 4 months) · High confidence Stabilization and commissioning
    It is end of this financial year, the next 4 months.

    — Bir Kapoor

Revenue

  • Battery Materials Revenue Flow Revenue · Q4 of this financial year · High confidence Start flowing in
    revenue is expected to start flowing in from Q4 of this financial year.

    — Bir Kapoor

Profitability

  • Battery Materials EBIT Break-even Profitability · FY27 · High confidence Achieve break-even
    Yes, I think we expect it to happen in FY '27. We should be able to reach that break-even point, yes.

    — Bir Kapoor

Margin

  • EBITDA Margins Margin · Long-term basis · Medium confidence Further improve
    Our EBITDA margins should further improve from the current levels on a long-term basis.

    — Bir Kapoor

  • Gross Margin Margin · Medium confidence Grow further
    I think it will be better than what we have and I would expect it to grow further, yes.

    — Bir Kapoor

Capex

  • EV Capex Capex · FY26 · High confidence ₹1,200 crores
    I think we have done Rs. 575 crores last year. This year, it is projected to be Rs. 1,200 crores in EV.

    — Archit Joshi

  • EV Capex Capex · FY27 · Medium confidence ₹1,500 crores (approx.)

    Previously ₹1,200 crores → ₹1,500 crores (approx.)

    We have not given that guidance yet, but it will be probably be higher than 1200, maybe more like 1500, approximately. Because what we had indicated earlier, Archit, is that we will be doing close to Rs. 6,000 crores of CAPEX in 4-5 years. So, we will follow up that plan. So, next year would probably be almost close to Rs. 1,500 crore, maybe higher.

    — Bir Kapoor

  • EV Capex (Multi-year) Capex · 4-5 years · High confidence ₹6,000 crores
    Because what we had indicated earlier, Archit, is that we will be doing close to Rs. 6,000 crores of CAPEX in 4-5 years.

    — Bir Kapoor

Business Scale-up

  • Battery Chemicals Business Scale-up Business Scale-up · FY28 · High confidence Significant numbers coming up
    we will see significant numbers coming up in FY '28. You are right, absolutely. That is how we are planning to build this business going forward.

    — Bir Kapoor

What to watch in Q3 FY26

Battery Materials Revenue Flow

Q4 FY26
Current Not yet started
Target Revenue flowing from Q4 FY26

Why it matters

Indicates the commercialization and revenue generation from the new EV materials business, crucial for overall growth.

revenue is expected to start flowing in from Q4 of this financial year.

Risks & concerns

  • US tariffs impacting sales of Fluoropolymers and Fluorochemicals

    medium

    Higher US tariffs impacted Fluoropolymer revenue (4% QoQ decline) and Fluorochemicals (15% YoY decline for R125 sales), with some tariff burden absorbed by GFL and customers; company is exploring alternate markets.

    Management acknowledged

  • Delays in Battery Material qualification process

    medium

    The qualification process for Battery Materials (LFP CAM, binders) is elaborate, involving product, audits, manufacturing capability, and quality control, which takes time before commercial sales can commence.

    Management acknowledged

  • Increased working capital days

    medium

    Working capital days increased from 120 to 182 due to the new Fluoropolymer business model (maintaining depots, inventory) and continuous manufacturing of samples for EV materials, expected to normalize with full capacity utilization.

    Management acknowledged

  • Sourcing of Iron Phosphate from China and future US compliance

    low

    Currently importing Iron Phosphate from China for LFP, which is not an issue for US compliance in the near term, but regulations regarding 'prohibited foreign entities' and value-add terms will become more stringent progressively over the next few years.

    Analyst downplayed

Q&A highlights

6 direct
Competitive landscape for Fluoropolymer in India with ADD on PTFE Direct
the anti-dumping duty has been recommended by DGTR. We expect it to be implemented. And that should have a positive impact on the business. And we are very well positioned to capture it, because we have a very wide range of grades and PTFE.

Discusses the positive impact of anti-dumping duties on the domestic Fluoropolymer business and GFL's strategy to capture market share due to its product portfolio and experience.

Asked by Sanjesh Jain

R32 safety incident, 20,000 MT capacity plan, and margin improvement drivers Direct
The incident, of course, Sanjesh, is an unfortunate incident, which happened. Now, it doesn't change our plan... And as far as 20,000 ton target is concerned, we had indicated that target by the end of this financial year, which is March. So, we will achieve there... This time, there are multiple reasons, of course, because of the product mix... There has also been impact of the cost control, which is driven by multiple factors, including the power cost... And finally, there has been some lift because of the currency.

Addresses concerns about a safety incident, reaffirms the R32 capacity target, and explains the multi-factor drivers behind the improved gross margins.

Asked by Sanjesh Jain

US tariff pass-through and impact on new Fluoropolymers Partial
In some cases, some part will be absorbed by the customer and some we will have to absorb. So, we are trying to find a new datum as we go along. But it is a very large jump in tariff, obviously. And no one is prepared. But nevertheless, going forward, we expect some adjustments to happen in US market with our customers. And in some cases, as I said earlier, that we look at focusing and developing some of the other markets where we can capitalize on opportunities.

Clarifies the partial absorption of US tariffs by GFL and customers, and the company's strategy to explore alternate markets to mitigate tariff impact on new Fluoropolymers.

Asked by Ankur

LiPF6 pricing sustainability and long-term contracts Partial
if the Chinese price itself goes up, as what we said earlier, then our overall target markets and the opportunity become very big for us... the price in China has gone up, then obviously, they are better off procuring it from a domestic supplier. So, that opportunity opens up.

Explains how rising Chinese LiPF6 prices create a larger market opportunity for GFL as an alternate domestic supplier, positioning it for long-term growth.

Asked by Ankur

Battery Materials revenue expectations for FY27 and export focus given Indian market delays Direct
So, we are looking at global markets outside of China. So, our initial business would be focusing on export markets for our products. And as the cell factories in India are kicking in the next calendar year, then slowly the Indian part of business will start increasing as a percentage of our overall sales.

Confirms the initial export-oriented strategy for Battery Materials, acknowledging that the Indian market will develop slower and contribute more as local cell factories ramp up.

Asked by Archit Joshi

Increase in working capital days and expected normalization Direct
the increase in the working capital cycle is essentially on account of your building various because you have taken a long backdated numbers. So, 120-180 days has essentially happened because we have developed our new Fluoropolymer business. The inventories, we stock at USA and GMBH, Germany and USA and sell from there. So, that has increased the inventories. Secondly, the EV business also, we are continuously manufacturing and sending the samples for the approvals.

Provides detailed reasons for the increase in working capital days, linking it to the new Fluoropolymer business model (depots, inventory) and EV material sample manufacturing, with an expectation of normalization post-commercialization.

Asked by Dhavan Shah

Sourcing of Phosphoric Acid and Iron Phosphate for Battery Materials and US compliance Direct
As far as LFP is concerned, we are not yet making FP, which is Iron Phosphate. We are importing Iron Phosphate... As far as the North American market is concerned... as long as there is no control from any prohibited foreign entity on our supply, there is a compliance... Right now, of course, the source of Iron Phosphate at the moment is China... Not really, not at least for next few years. Because this bill that we are talking about, the condition becomes more stringent progressively, in terms of the value-add terms.

Clarifies raw material sourcing for LFP (importing Iron Phosphate from China) and addresses concerns about compliance with US regulations regarding 'prohibited foreign entities' (PFE), stating GFL qualifies for now, but acknowledges future stringency.

Asked by Archit Joshi

Battery Chemicals business scale-up year Direct
we will see significant numbers coming up in FY '28. You are right, absolutely. That is how we are planning to build this business going forward.

Provides a clear timeline for the significant revenue scale-up in the Battery Chemicals business, indicating FY28 as a pivotal year for growth.

Asked by Rohit Nagraj

3 min read 7 chapters

Detailed narrative

Q2 FY26 Financial Performance and Margin Expansion

Gujarat Fluorochemicals Limited (GFL) reported a resilient Q2 FY26, with the chemical segment revenue growing 2% YoY to ₹1,210 crores. EBITDA saw a significant 26% YoY increase to ₹381 crores, leading to an EBITDA margin of 32%, up 608 basis points from Q2 FY25. The chemical segment's PAT also grew robustly by 51% YoY to ₹198 crores, driven by an improved product mix, continued cost optimizations, and favorable currency movements.

Segmental Performance and Tariff Impacts

The Fluoropolymer segment's revenue increased 8% YoY but declined 4% QoQ, primarily due to higher US tariffs, which management expects to ease. The Fluorochemical business faced a 15% YoY revenue decline due to R-22 quota reductions, seasonality, and US tariffs impacting R125 sales. Conversely, the Bulk Chemical segment saw revenue growth driven by higher Chloromethane prices and increased volumes, with the specialty chemical segment remaining stable.

Battery Materials Business Commissioning and Outlook

GFL's Battery Materials business is progressing, with the LFP CAM facility successfully commissioned and samples being sent for customer approvals. Commercial sales for binders are anticipated to begin in H2 Calendar Year 2026, and overall Battery Materials revenue is expected to start flowing from Q4 FY26. The company is strategically positioned as a non-China integrated LiPF6 producer, benefiting from a significant increase in LiPF6 prices from $10/kg to $17/kg, which is expected to positively impact the business outlook.

Capex Plans and Funding for EV Materials

The company has a substantial Capex plan for its EV materials business, with ₹1,200 crores projected for FY26 and an estimated ₹1,500 crores for FY27, primarily focusing on capital-intensive cathode and salt production. A multi-year Capex of ₹6,000 crores is planned over 4-5 years. GFL confirms it is fully funded for current and near-term Capex, with an additional ₹200 crores term loan yet to be drawn and $125 million secured for the next 6-9 months.

R32 Capacity Expansion and Safety Measures

Despite an unfortunate incident, GFL remains committed to its R32 capacity target of 20,000 tons by the end of FY26 (March 2026), while strengthening safety processes and systems. The company also plans to maximize its R32 capacity to its entitlement of 30,000 tons, with a decision on this expansion expected a quarter after the 20,000-ton capacity stabilizes and commissions by 4Q FY26.

Working Capital Dynamics and Long-term Profitability

Working capital days have increased from 120 to 182, attributed to the new Fluoropolymer business model requiring inventory at depots and the manufacturing of samples for EV materials. Management expects this to normalize as EV operations scale up and the new Fluoropolymer business reaches full volumes. EBITDA and gross margins are projected to improve further from current levels on a long-term basis, driven by a better product mix and continued cost optimizations.

Market Strategy and US Compliance for Battery Materials

GFL's initial strategy for Battery Materials focuses on export markets outside China, acknowledging that the Indian market will develop slower. The company believes its LFP CAM plant in India will be more CAPEX efficient than potential US manufacturers. Regarding raw material sourcing, GFL currently imports Iron Phosphate from China for LFP, which is compliant with US regulations for the next few years, though future regulations are expected to become more stringent progressively.

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