Gujarat Fluorochemicals Limited — Q3 FY26 earnings call

Call held 12 Feb 2026

Management summary

Gujarat Fluorochemicals experienced a challenging Q3 FY26 with marginal revenue and EBITDA declines, primarily due to weakness in the refrigerant segment. However, the fluoropolymer segment showed robust growth, and the battery materials business made significant strategic progress with IFC and sovereign fund investments, and commercialization of LiPF6. The company anticipates improved conditions ahead, driven by tariff rationalization, R-32 production, and EV ESS adoption.

Highlights

  • Fluoropolymer segment delivered healthy growth of 14% YoY, driven by semicon and fluoroelastomer categories.

  • Recent reduction in U.S. tariffs from 50% to 18% provides significant relief and restores competitiveness in key export markets.

  • IFC approved investment of ₹430 crores in GFCL EV Products Limited, supporting India's first integrated battery materials manufacturing facility.

  • Another sovereign fund approved investment of $82 million in battery materials business, with documentation in process.

  • LiPF6 commercial supplies commenced in December 2025, with repeat orders received in Q4 FY26, and LFP plant operations stabilized with samples dispatched.

Concerns

  • Consolidated Revenue declined marginally by 1% YoY to ₹1,136 crores.

  • EBITDA declined by 6% to ₹275 crores from ₹294 crores in Q3 FY25.

  • Refrigerant portfolio faced significant headwinds, including R-22 production quota reduction, seasonally subdued demand, and weak R-125 prices.

  • Delay in R-32 production start-up resulted in lower-than-expected profitability, now pushed to Q4 FY26.

  • Fluorochemicals business revenue declined by 33% YoY and 24% sequentially.

  • Inventory levels increased to 201 days from an aspiration of 120 days due to cautious ordering and temporary deferment of demand.

Key financials

2 periods

Headline

  • Consolidated Revenue
    ₹1,136 Cr
    YoY -1%
  • EBITDA
    ₹275 Cr
    YoY -6%

Q3 FY25

  • EBITDA
    ₹294 Cr

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
    14% Revenue Growth-0.03 sequential_decline Revenue Decline
  • Fluorochemicals
    -0.33 yoy_decline Revenue Decline-0.24 sequential_decline Revenue Decline
  • Bulk Chemicals
    — Revenue Decline

Capital allocation

high confidence
  • Capex ₹6,000 Cr
    • Battery materials (Oman project) $216 Mn
    • Battery materials (overall asset base) ₹1,700 Cr
    On 5th of December, 2025, the International Finance Corporation, IFC, has approved investment of Rs. 430 crores in our subsidiary, GFCL EV Products Limited. This investment supports the development of India's first integrated battery materials manufacturing facility and strengthens the domestic EV supply chain ecosystem. IFC's participation reflects confidence in our strategy and execution capabilities. As endorsement of our business strategy and growth prospects in the battery materials space, another sovereign fund has approved investment of $82 million in battery materials business. The documentation is in process and likely to be executed shortly. When we entered the battery materials space, our approach was focused on building capabilities, securing customer validation and scaling in a disciplined manner. Keeping that in mind, we are setting up a state-of-the-art greenfield advanced battery materials project in Oman to produce battery materials for lithium ion batteries with an estimated investment of $216 million. ... No, it includes that, Rohit. It's part of that.
  • M&A GFCL EV Products Limited (subsidiary) Acquisition · Approved · Consideration ₹[object Object] (convertible instrument)

    Supports development of India's first integrated battery materials manufacturing facility and strengthens domestic EV supply chain.

    Convertible instrument linked to IPO milestones, no fixed valuation.

    On 5th of December, 2025, the International Finance Corporation, IFC, has approved investment of Rs. 430 crores in our subsidiary, GFCL EV Products Limited. This investment supports the development of India's first integrated battery materials manufacturing facility and strengthens the domestic EV supply chain ecosystem. IFC's participation reflects confidence in our strategy and execution capabilities. ... So, both these investments are coming in convertible form where they are linked to the certain milestones on the IPO that way. So, there's no fixed valuation neither for the IFC investment in India nor for the sovereign fund that is going to invest in the subsidiary in Oman. So, they are more like a convertible instrument, which will have a fixed return is linked to the certain milestones.
  • M&A Battery materials business Acquisition · Announced · Consideration ₹[object Object] (convertible instrument)

    Endorsement of business strategy and growth prospects in battery materials space.

    Convertible instrument linked to IPO milestones, no fixed valuation. Documentation in process.

    As endorsement of our business strategy and growth prospects in the battery materials space, another sovereign fund has approved investment of $82 million in battery materials business. The documentation is in process and likely to be executed shortly. ... So, both these investments are coming in convertible form where they are linked to the certain milestones on the IPO that way. So, there's no fixed valuation neither for the IFC investment in India nor for the sovereign fund that is going to invest in the subsidiary in Oman. So, they are more like a convertible instrument, which will have a fixed return is linked to the certain milestones.

Guidance & targets

Capacity

  • R-32 Production Capacity (Phase 1) Capacity · by Q2 FY27 (approx) · High confidence 20,000 tonnes
    I had indicated in the last call that target is to go for 20,000 tonnes in the first phase. Of course, there was a setback due to the incident. And because of this, our plan got a little bit delayed. However, that delay is not significant. Our plan is to still commission going to 20,000 tonnes, as I had indicated earlier. Of course, at that time, I had indicated it was going to be March end. Now I expect that to be slightly delayed by a quarter or maybe a quarter and a half, okay?

    — Bir Kapoor

  • R-32 Production Capacity (Long-term) Capacity · by December 2027 · High confidence 30,000 tonnes
    And what you said December 2026, I think the number is December 2027. The capacity can be added up to December 2027, okay? Of course, in the previous call also I had indicated that the long-term plan is to go to 30,000 tonnes, or go up to our quota that we have today. So, that plan still remains intact. But however, in the first phase, we will go up to 20,000 tonnes, Sanjesh.

    — Bir Kapoor

  • R-32 Quota Confirmation Capacity · by end of this year (2026) · High confidence Confirmed
    So, just a clarification that I have received, Rohit, that the quota has to be confirmed by end of this year, but the plant can be commissioned in December 2027. And we already have a quota, so we can commission the plant by December 2027 of the quota that we already have access to.

    — Bir Kapoor

Working Capital

  • Working Capital Days Working Capital · in a year's time frame · Medium confidence 170-180 days

    From 201 days today

    So, what we are targeting, Sanjesh, is somewhere around maybe 170 to 180 is what we think is a realistic number going forward because of our business model is based on stock and sell and also shipping material early from here. So, keeping that in mind. So, of course, it's on the higher side at the moment for the reason that has been explained by Kapil.

    — Bir Kapoor

Revenue

  • Battery Materials Revenue Growth Revenue · FY27 · Medium confidence Healthy revenue growth
    With improving order inflows and better visibility, we are confident that FY 2027 should see healthy revenue growth from this vertical.

    — Bir Kapoor

Capacity Utilization

  • Battery Materials (current capacity) Capacity Utilization · by the end of this year (2026) · High confidence Fully utilized
    So, for the plant that are already there, we expect to get fully utilized probably by the end of this year.

    — Bir Kapoor

  • Battery Materials (overall capacity) Capacity Utilization · by 2027, 2028 · High confidence Fully utilized
    All I can say is that the capacity that we have right now, we expect to get fully utilized by 2027, 2028, okay, because this year will be the ramp-up growth period for us.

    — Bir Kapoor

Commercialization

  • Fluoropolymer Binders (PVDF) Commercialization · first half of FY27 · High confidence Commercial operations
    In fluoropolymer binders, the qualification process is progressing as planned, with commercial operations expected to begin in the first half of FY 2027. This further strengthens our integrated battery materials portfolio.

    — Bir Kapoor

  • LFP Cathode Active Material Commercialization · over the coming months · Medium confidence Commercial supply
    In LFP cathode active material, our plant has stabilized operations. We have begun sample dispatches to prospective customers and qualification process is progressing. We expect approvals over the coming months, following which commercial supply will commence.

    — Bir Kapoor

  • R-32 Sales Ramp-up Commercialization · Q4 FY26 · High confidence Start from Q4

    Previously Q3 → Start from Q4

    Also, the value creator for us this year going forward in this segment will be R-32 sales ramp-up, which we are expecting to start from Quarter 3, which has now been pushed to Quarter 4.

    — Bir Kapoor

  • Electrolyte Business Commercialization · end of FY27 · Medium confidence Start by end of coming financial year
    And as far as electrolyte is concerned, that will happen by the business is likely to start by the end of coming financial year. Does that answer your question?

    — Rajiv Rao

What to watch in Q4 FY26

R-32 Production Ramp-up

Q4 FY26
Current Production started, ramping up
Target Significant sales ramp-up

Why it matters

R-32 is a key value creator and its successful ramp-up is crucial for the refrigerant segment's recovery and overall profitability.

Also, the value creator for us this year going forward in this segment will be R-32 sales ramp-up, which we are expecting to start from Quarter 3, which has now been pushed to Quarter 4.

Risks & concerns

  • Weakness in refrigerant segment

    high

    Impacted by R-22 production quota reduction, seasonally subdued demand, and weak R-125 prices.

    Management acknowledged

  • Delay in R-32 production start-up

    high

    Pushed from Q3 to Q4 FY26, impacting expected profitability.

    Management acknowledged

  • Inventory buildup

    medium

    Increased to 201 days due to seasonal weakness, holiday season, and tariff uncertainty, though off-take has started.

    Management acknowledged

  • Long qualification times for EV/ESS products

    medium

    Delays commercialization and revenue ramp-up for new battery materials products.

    Management acknowledged

  • Antidumping duty not approved for PTFE

    medium

    Eroded expected growth in PTFE domestic market, requiring relocation to other markets.

    Management acknowledged

Q&A highlights

6 direct
R-32 capacity commissioning and timelines Direct
Our plan is to still commission going to 20,000 tonnes, as I had indicated earlier. Of course, at that time, I had indicated it was going to be March end. Now I expect that to be slightly delayed by a quarter or maybe a quarter and a half, okay? ... The capacity can be added up to December 2027, okay? Of course, in the previous call also I had indicated that the long-term plan is to go to 30,000 tonnes, or go up to our quota that we have today.

Clarifies the revised timeline for R-32 capacity commissioning and the long-term capacity target, which is a key growth driver.

Asked by Sanjesh Jain

Fluoropolymer growth and market share gains Direct
We have grown there, taking some market share from our erstwhile legacy players who are going out. ... we continue to gain market share as and when we are getting the approval from the customers.

Explains the drivers behind fluoropolymer growth, including market share gains from exiting players and ongoing customer qualifications, despite missing earlier growth aspirations.

Asked by Sanjesh Jain

Inventory buildup and working capital management Direct
However, last year we saw that in the last quarter also, as it was a holiday period in U.S.A., Europe, and also some of the slowdowns happened due to tariffs also that we had to hold some inventories with us, either over here or in our stock warehouses in other countries. So, that's how the inventory went up. However, offtake has started, and we are seeing diminishing inventories right from the beginning of the last month. ... So, what we are targeting, Sanjesh, is somewhere around maybe 170 to 180 is what we think is a realistic number going forward.

Addresses the significant increase in inventory days (201 days) and outlines the strategy to reduce it, which impacts capital efficiency.

Asked by Sanjesh Jain

Battery materials FY27/28 revenue potential and asset turn Partial
I mean, see, the way we started, Sanjesh, is we started building our first plant so that we can get it qualified and then slowly ramp up. So, if you look at today, for example, in LiPF6 case is qualified. So, our supply has started. LFP, the plant is commissioned, we got the right quality level. It's going through the qualifications. ... So, for the plant that are already there, we expect to get fully utilized probably by the end of this year. ... Asset turn we had always given, Sanjesh, on the mix. It's around 2x.

Provides insights into the commercialization progress of battery materials and the expected asset utilization, crucial for understanding the return on significant investments.

Asked by Sanjesh Jain

Oman project CAPEX and strategic advantage Direct
No, it includes that, Rohit. It's part of that. ... Yes. On Oman front, of course, there are, as I mentioned in earlier question, the certain advantage we have because of the location because that geographical location gives a certain advantage in terms of the supplying from Oman has tariff advantage in certain markets. Also accessing raw materials and skill sets in Oman is easier. So, there's a definitive advantage of setting up a facility in Oman, okay?

Confirms the Oman project is part of the larger battery materials CAPEX and highlights the strategic benefits of its location, including tariff advantages and raw material access.

Asked by Rohit Nagraj

Competitive advantage of Oman plant vs. Chinese plants Partial
Of course, the Chinese capex is, of course, right now, the lowest. But however, it's not very far from that. So, it's obviously, Oman being a country where we will have to bring all the equipment and machinery from outside. The capex is expected to be higher. But nevertheless, when we look at the entire Opex and Capex combination, I think it has a strategic advantage for us.

Addresses the cost competitiveness of the Oman plant, acknowledging higher capex but emphasizing overall strategic and operational advantages.

Asked by Arun Prasath

LiPF6 pricing mechanism and market strategy Direct
So, most of our LiPF6 pricing with our customers is based on a formula with lithium carbonate as a reference. So, as the lithium carbonate fluctuates, so will our LiPF6 pricing, and our margins will be intact. That's the way we have structured our contracts. ... But having said that, Arun, the Chinese prices were very low. They were swinging. However, I said it in earlier calls as well that our price points, of course, are very different. We are actually a non-PFA supplier, which gives a certain advantage, not only on accessing customer base, but also on the price points.

Clarifies the formula-based pricing strategy for LiPF6, which aims to maintain margins despite lithium carbonate price fluctuations, and highlights competitive positioning against Chinese suppliers.

Asked by Arun Prasath

Fluoropolymer binder for dry process (Tesla breakthrough) Direct
See, right now, the binder, which is mentioned and which is in the final stages of qualification is PVDF binder. PTFE binder is also being tested as of now. So, we have capability to produce both PTFE as well as PVDF. The business will first start what we have mentioned is from PVDF. ... Yes, surely. I mean, we are capable to produce, and that's where the outlook of fluoropolymer when we gave a very strong outlook from multiple sectors. One of the factor, of course, is what you are mentioning.

Confirms the company's capability to produce PVDF and PTFE binders relevant to advanced battery manufacturing processes, indicating a significant future opportunity.

Asked by Ketan Gandhi

2 min read 6 chapters

Detailed narrative

Q3 FY26 Performance Overview and Headwinds

Gujarat Fluorochemicals reported a challenging Q3 FY26, with consolidated revenue marginally declining by 1% YoY to ₹1,136 crores. EBITDA also saw a 6% decline, reaching ₹275 crores compared to ₹294 crores in Q3 FY25. This performance was primarily attributed to seasonal weakness in the refrigerant segment, holiday seasons in Europe and the U.S., and continued uncertainty around U.S. tariff policies, which impacted both volumes and realizations.

Refrigerant Segment Challenges and Outlook

The refrigerant portfolio bore the brunt of multiple headwinds, with the most adverse pressure coming from R-22 due to production quota reductions and subdued demand. The delay in R-32 production start-up further impacted profitability, now expected to commence in Q4 FY26. R-125 prices also remained weak. However, management expects improved profitability in coming quarters as seasonal demand normalizes and R-32 sales ramp up, with the first phase targeting 20,000 tonnes capacity, eventually reaching 30,000 tonnes by December 2027.

Fluoropolymer Segment Resilience and Growth Drivers

Despite overall challenges, the Fluoropolymer segment delivered healthy 14% YoY growth, though it saw a 3% sequential decline due to U.S. tariff policy uncertainty. The recent reduction in U.S. tariffs from 50% to 18% is expected to provide significant relief and restore competitiveness. The company anticipates strong momentum, particularly from the semiconductor industry, and is gaining market share from legacy players in elastomers and other fluoropolymers, with new grades under qualification.

Battery Materials: Strategic Investments and Commercialization Progress

The battery materials business is a key strategic focus, attracting significant investments. IFC approved ₹430 crores in GFCL EV Products Limited, and another sovereign fund approved $82 million. The company is setting up a $216 million greenfield advanced battery materials project in Oman. LiPF6 commercial supplies commenced in December 2025, with repeat orders in Q4 FY26. The LFP cathode active material plant has stabilized operations, with sample dispatches and qualification progressing, and fluoropolymer binders are expected to begin commercial operations in H1 FY27.

Capital Allocation and Funding for Growth

The company has already invested approximately ₹1,700 crores in battery chemical assets. The Oman project, estimated at $216 million, is part of the larger ₹6,000 crores CAPEX plan for battery materials. The IFC and sovereign fund investments are structured as convertible instruments linked to IPO milestones, providing funding without fixed valuation. Management aims to reduce working capital days from the current 201 to 170-180 days within a year.

Outlook and Future Strategy

Management expressed confidence in improving conditions ahead, driven by tariff rationalization, R-32 production, and faster EV ESS adoption. The company remains focused on execution, cost discipline, and responsible scaling of new growth platforms. The outlook for FY27 includes healthy revenue growth from battery materials, with current capacities expected to be fully utilized by the end of 2026, and overall capacity by 2027-2028.

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