Gujarat Fluoroch

Gujarat Fluorochemicals delivered a strong Q4 FY25, reporting revenue from operations of INR 1,225 crores, an 8% increase year-on-year. EBITDA saw a significant 28% growth, reaching INR 305 crores, with margins expanding from 21% to 25%. The company's consolidated PAT nearly doubled to INR 191 crores. Furthermore, net debt reduced to INR 1,451 crores as of March 31, 2025, from INR 1,769 crores a year prior, improving the net debt to equity ratio from 0.3% to 0.2%.

The Fluoropolymer business was a key growth driver, with revenue primarily boosted by increased volumes in new, higher value-added Fluoropolymers. Prices in this segment remained stable across domestic and global markets, and FKM volumes are steadily rising due to new project approvals. Management anticipates a robust 25% growth in Fluoropolymers for FY26, benefiting from market consolidation and a focus on high-value grades.

The company is making rapid strides in its Battery Materials business, earmarking INR 1,200 crores out of a total INR 1,600 crores capex for FY26 towards GFCL EV. The LiPF6 salt production has stabilized, meeting global specifications, and the LFP plant has achieved mechanical completion, with trial production slated to begin next month. Electrolyte and binder plants are also undergoing advanced customer validation, positioning GFCL EV as a first-mover non-Chinese global supplier.

The Bulk Chemicals segment faced challenges in Q4 FY25 due to an incident at the Dahej CMS-1 plant, resulting in approximately 15% production loss. This, combined with softening MDC prices, negatively impacted profitability in the segment. However, the company expects the Bulk Chemicals segment to normalize in coming quarters. In the Fluorochemicals business, R-22 prices improved, and the company is actively working to prepone the commercial sale of R-32 to the second half of FY26, targeting a capacity of 20,000 tons.

Working capital days increased during the quarter, attributed to building up inventory in anticipation of growth in the coming quarters, which management expects to normalize within 1-2 quarters. While the Battery Materials business is a key growth area, its profitability is currently impacted by higher depreciation and interest costs associated with the ongoing capex. These costs are expected to normalize as revenues from the new segments ramp up.

GFCL EV's strategy focuses on the US and Indian markets, aiming to be a key global supplier with a wide range of products. Despite some reported delays in the global battery materials market, the company's long-term plan and capex benchmarks remain consistent for outside-China markets. The INR 1,200 crores capex for the EV business in FY26 will be funded through external fundraises, ensuring GFL's internal cash flow is not relied upon for these investments.