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TANFAC Industries Ltd. — Q1 FY27 earnings call

Call held 27 Jul 2026

Company page: TANFAC Industries share price, financials & guidance record

Management summary

TANFAC Industries reported a resilient Q1 FY27 with 6.3% YoY revenue growth to INR187 crores, primarily driven by its solar grade DHF business. Despite margin pressures from elevated raw material and energy costs, the company achieved net debt-free status through a successful INR250 crores QIP and planned INR100 crores preferential issue. Strategic projects like the HFC-32 plant are on track for Q3 FY27 commissioning, and the company is actively pursuing expansion into higher-value fluorochemicals and electronic grade applications, projecting robust future growth and margin expansion.

Highlights

  • Revenue of INR187 crores, up 6.3% YoY, driven by solar grade DHF business.

  • Successful completion of INR250 crores QIP and approval for INR100 crores preferential issue, making the company net debt-free.

  • HFC-32 project (20,000 MTPA) on schedule for commissioning by end of Q3 FY27, with 65% capacity covered by long-term contracts.

  • Strategic focus on higher-value fluorochemicals, including electronic grade chemicals, HFOs, and high-performing fluoropolymers.

  • Guidance for FY27 revenue growth of ~30% and FY28 revenue growth of >60%, with FY28 EBITDA margins expected around 25%.

Concerns

  • Operating EBITDA declined 1.4% YoY to INR28.6 crores, with EBITDA margin at 15.3% in Q1 FY27.

  • Profitability impacted by higher fuel and power costs, elevated sulphur prices, and higher tax outflows.

  • PAT decreased 13.4% YoY to INR16.8 crores in Q1 FY27, also affected by deferred tax adjustment.

  • AHF revenue expected to come down in the interim (5-8 months lag) due to captive consumption by the R-32 project.

Key financials

  1. Revenue from Operations ₹187 Cr +6.3%YoY
  2. Operating EBITDA ₹28.6 Cr -1.4%YoY
  3. EBITDA Margin 15.3%
  4. Profit After Tax (PAT) ₹16.8 Cr -13.4%YoY

What they filed

Q1 FY27: revenue up 6.3%, net profit down 10.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue112 178 172 176 169 +51%173 −3%193 +12%187 +6%
EBITDA27 50 36 29 27 +0%26 −48%30 −17%29 +0%
Net profit19 35 23 19 17 −11%16 −54%18 −22%17 −11%
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.

Capital allocation

high confidence
  • Capex ₹100 Cr this quarter · ₹395 Cr (FY27) planned
    • HFC-32 project ₹395 Cr
    • Solar grade DHF expansion ₹30 Cr
    • AHF expansion ₹120 Cr
    • Electronic grade value-added products ₹150 Cr
    So, currently only one project is going on. So, I have specific numbers for the total project total spend as on date. So out of INR390 crores, cash outflow is INR100 crores and total committed liability is INR315 crores, out of total INR390 crores project. (Afzal Malkani, Page 8) ...solar grade about INR30 crores to INR40 crores, AHF around INR120 crores, and electronic grade is around INR150 crores. So, it will be around INR300 crores capex in all the three segments. (Afzal Malkani, Page 7)
  • Debt Net ₹0 Cr
    TANFAC today is net debt-free, providing us with significant financial flexibility to pursue our next phase of expansion while maintaining a prudent balance sheet. (Afzal Malkani, Page 3)
  • Liquidity Liquidity disclosed Net debt-free status provides significant financial flexibility to fund ongoing expansion projects without undue leverage.
    TANFAC today is net debt-free, providing us with significant financial flexibility to pursue our next phase of expansion while maintaining a prudent balance sheet. (Afzal Malkani, Page 3)

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY27 · High confidence at least 30%
    So yes, so if you see, the company plans to achieve in the current year, at least we are planning to achieve the growth of at least 30% on account of launch of our new project in Q4 FY27 and ramp-up of capacity utilization of existing products.

    — Afzal Malkani

  • Revenue Growth Revenue · FY28 · High confidence over 60%
    For FY28, we are targeting to achieve over 60% growth on account of ramp-up of the new project and other inorganic fluoride products currently which we are working on.

    — Afzal Malkani

Margin

  • EBITDA Margin Margin · Next quarter onwards (Q2 FY27) · High confidence 16% to 19%
    On the margin side, yes, in the next quarter onwards our if we talk about the EBITDA margins, then it will improve in the range of 16% to 19%...

    — Afzal Malkani

  • EBITDA Margin Margin · Next year (FY28) once HFC-32 operational · High confidence about 25%
    ...and next year margin will be even much, much better, about 25% once this new project HFC-32 will be operational.

    — Afzal Malkani

  • HFC-32 Project EBITDA Margin Margin · Long-term · High confidence around 30%
    Yes, so for this particularly for this HFC-32 project as we mentioned in our earlier call that margin will be around 30% for the new project and overall business EBITDA margin would be around 25%.

    — Afzal Malkani

Capex

  • Future Capex (Solar DHF, AHF, Electronic Grade) Capex · Post HFC-32 commissioning · High confidence around INR300 crores
    So, it will be around INR300 crores capex in all the three segments. (Afzal Malkani, Page 7) ...we will start once we complete our ongoing project, which is HFC-32 commissioning in December, after that immediately we'll start.

    — Afzal Malkani

  • Total Capex Capex · Next 4 years · High confidence INR1,500-1,700 crores
    See, this number will be close to about INR1,500 crores to INR1,700 crores it will be the capex number.

    — Hemango Gupta

Capacity Utilization

  • R-32 Volume Utilization Capacity Utilization · Q4 FY27 · High confidence 65% to 70%
    Volume guidance for 'FY2027-28 currently on a conservative basis we are considering as a 80% to 85%. In FY28, right? Yes, 'FY28 when we will... 'FY27 for the we are calculating 65% to 70% for the Q4.

    — Afzal Malkani

  • R-32 Volume Utilization Capacity Utilization · FY28 · High confidence 80% to 85%
    Volume guidance for 'FY2027-28 currently on a conservative basis we are considering as a 80% to 85%.

    — Afzal Malkani

Tax Rate

  • R-32 Project Tax Rate Tax Rate · Long-term · High confidence 22%
    Yes, this will be 22% tax rate, yes.

    — Afzal Malkani

Commissioning

  • HFC-32 Project Commissioning Commissioning · Q3 FY27 · High confidence End of Q3 FY27
    Execution continues to progress well and remains on schedule for commissioning by the end of Q3 financial year 2027.

    — Hemango Gupta

  • AHF Expansion Commissioning Commissioning · FY28 · High confidence FY28 beginning or mid
    No, I think in '28. '27 we'll start, '28 beginning or mid I think it should be commissioned.

    — Hemango Gupta

Market Share

  • Export Mix Market Share · Post R-32 commissioning · High confidence 50% domestic, 50% exports

    Previously 90% domestic, 10% exports → 50% domestic, 50% exports

    And currently the 90% of revenue is domestic and balance 10% is exports, but post commissioning of RG, we expect this ratio to be 50%-50%.

    — Hemango Gupta

What to watch in Q2 FY27

EBITDA Margin Improvement

next quarter (Q2 FY27)
Current 15.3%
Target 16-19%

Why it matters

Verification of management's guidance on margin recovery post raw material and energy cost pressures is crucial for profitability outlook.

On the margin side, yes, in the next quarter onwards our if we talk about the EBITDA margins, then it will improve in the range of 16% to 19%...

Risks & concerns

  • Raw material price volatility (Sulphur)

    medium

    Sulphur prices increased from INR30 to INR105, impacting margins, though cost pass-through is expected with a 30-45 day lag.

    Management acknowledged

  • Higher fuel and power costs

    medium

    Increased due to geopolitical situation in West Asia and captive power plant shutdown for maintenance; expected to stabilize in Q2 FY27.

    Management acknowledged

  • Deferred tax adjustment

    low

    Impacted PAT in Q1 FY27, but effective tax rate is expected to normalize over the balance financial year.

    Management acknowledged

Q&A highlights

8 direct
Future Growth and Margin Outlook Direct
For FY28, we are targeting to achieve over 60% growth on account of ramp-up of the new project and other inorganic fluoride products currently which we are working on. And beyond the currently announced expansion, we continue to actively build a broader pipeline of high-margin fluorine-based products and technologies. So, in a nutshell, 60% growth will be there compared to in FY27. On the margin side, yes, in the next quarter onwards our if we talk about the EBITDA margins, then it will improve in the range of 16% to 19% and next year margin will be even much, much better, about 25% once this new project HFC-32 will be operational.

Management provided specific, aggressive growth and margin targets for the next two fiscal years, indicating strong confidence in new projects like HFC-32.

Asked by Meet Gada

Future Capex Plans beyond HFC-32 Direct
So, it will be around INR300 crores capex in all the three segments. (Afzal Malkani, Page 7) ...we will start once we complete our ongoing project, which is HFC-32 commissioning in December, after that immediately we'll start. (Afzal Malkani, Page 7) ...this number will be close to about INR1,500 crores to INR1,700 crores it will be the capex number. (Hemango Gupta, Page 18)

Management outlined significant future capex plans totaling INR1,500-1,700 crores over the next 4 years, detailing specific allocations for solar DHF, AHF, and electronic grade products, signaling continued expansion.

Asked by Sujal Jhanwar

Durability of Solar Grade DHF First-Mover Advantage Direct
See, we thought this ahead and we executed it fast with our own and some bought technologies, and we executed it very fast and customer approvals do take time. It is not a short cycle because you have to learn it through. So that's what we did. I can't comment on the competition, but today we are the only ones who are producing solar grade and selling solar grade and we are approved in almost all the customers in solar grade now.

Analyst questioned the sustainability of the first-mover advantage, and management provided a detailed rationale based on execution, technology, and customer qualification processes, reinforcing their competitive edge.

Asked by Aakash

R-32 Contract Pricing Strategy and Margin Stability Direct
So, if you look at our contracts today in -- today's dollar terms, it is about $5.5 which was earlier $5 when we did the contract. So, it is about $5.5. We looked at forecasting looking into a demand-supply in next 1, 1.5 years, the prices will soften to say $6 to $7 in between. So, looking at our speed-to-market, go-to-market where we are placing our 65% of the product right from day 1, instead of working on it, spending overheads, travel, hiring manpower and all, I've already placed our 65% of the product in the market at a decent price margin wherein it is also formula-based.

Management explained the strategic rationale behind long-term R-32 contracts at a lower price than spot, emphasizing speed-to-market, expected price softening, and formula-based pricing with cost pass-through, which ensures margin stability.

Asked by Dhruv Bajaj

Impact of Peer HF Capacity on TANFAC's Business Direct
So currently we don't see any significant impact due to this because one-third of our HF capacity goes for the solar grade DHF where we don't have any competition as mentioned by Mr. Gupta. And in addition to that around 4,000 metric ton, we use captively. So, 50% of our demand is already placed and remaining goes into the varied industries in many application like surface treatments and fluoropolymers. And apart from this in future from December onwards when our HFC-32 is commercialized, we would captively use significantly more HF.

Management clarified that new HF capacity from competitors would not significantly impact TANFAC due to captive consumption for its solar DHF and HFC-32 projects, and diversified end-user industries.

Asked by Rudraksh Gupta

Chinese Import Pressure in AHF Market Direct
So, we don't see any challenges from China for the AHF import because AHF is a controlled and dual-use chemical and its export is subject to stringent regulatory approvals, extensive end-use documentations, custom filings, and export license requirement making the process lengthy and cumbersome. And additionally, AHF requires dedicated ISO tanks for transportations and these tanks often return empty from India.

Management provided a detailed explanation of regulatory and logistical barriers that prevent significant pricing pressure from Chinese AHF imports, addressing a common industry concern.

Asked by Rudraksh Gupta

Q1 Margin Pressure and Expected Recovery Direct
So first if I take the elevated power and fuel cost, that is largely attributable to the West Asia situation and in addition to that due to shutdown of sulfuric acid plant due to maintenance, our captive power plant was not operational and hence we bought power from grid which led to increase in power cost on one-off basis in Q1FY27, but overall power and fuel cost should be stabilized in Q2 FY27.

Management transparently explained the specific reasons for Q1 margin compression (geopolitical, maintenance-related energy costs) and provided a clear timeline for expected stabilization and recovery in Q2 FY27.

Asked by Ankur Periwal

Semiconductor Grade DHF R&D and Commercialization Timeline Direct
Yes, to reduce the time, we will tie up with the technology suppliers and that's how we go, to make go-to-market faster. Otherwise, if we go on the R&D, it might take years. ... I think more than R&D effort; it is more of an approval cycle which takes about 1 to 1.5 years in semicon for approval cycle. So, approval cycle will take 1 to 1.5 years. After that we can see the increased margins of semicons.

Analyst probed the complex R&D and commercialization path for semiconductor grade DHF, and management outlined a strategy involving technology partnerships to accelerate market entry and a 1-1.5 year approval cycle, indicating a high-margin future segment.

Asked by Nirvana Laha

3 min read 7 chapters

Detailed narrative

Strategic Capital Infusion & Balance Sheet Strengthening

TANFAC successfully completed a INR250 crores Qualified Institutional Placement (QIP), which received strong participation from institutional investors. Additionally, the board approved a proposed preferential issue of approximately INR100 crores, including INR61 crores from promoters. These initiatives have transformed the company's capital structure, making it net debt-free and providing significant financial flexibility for future expansions. The board also approved seeking listing on the National Stock Exchange to improve liquidity and broaden investor participation.

Q1 FY27 Financial Performance & Margin Headwinds

For Q1 FY27, TANFAC reported revenue from operations of INR187 crores, a 6.3% increase year-on-year, primarily driven by the continued ramp-up of its solar grade DHF business. However, operating EBITDA stood at INR28.6 crores, a slight decline from INR29 crores in Q1 FY26, resulting in an EBITDA margin of 15.3%. Profit after tax (PAT) also decreased to INR16.8 crores from INR19.4 crores YoY. Margins were impacted by elevated sulphur prices, higher fuel and power costs due to geopolitical situations and plant maintenance, and a deferred tax adjustment.

HFC-32 Project on Track for Q3 FY27 Commissioning

The 20,000 metric tons per annum HFC-32 refrigerant gas project is progressing well and remains on schedule for commissioning by the end of Q3 FY27. The company has committed INR315 crores against the total project cost of INR395 crores. Management highlighted that 65% of the plant's capacity is already covered by long-term commercial agreements for 5-8 years, providing strong revenue visibility and ensuring a fixed EBITDA margin for these volumes. The remaining 30% will be sold on the spot market.

Aggressive Expansion into High-Value Fluorochemicals

TANFAC is strategically moving up the fluorochemical value chain, focusing on electronic grade chemicals, HFOs, high-performing fluoropolymers, and inorganic fluorides. Beyond the HFC-32 project, the company plans an additional INR300 crores capex for solar grade DHF expansion (INR30-40 crores), AHF expansion (INR120 crores), and electronic grade value-added products (INR150 crores). The total capex outlay for the next four years is projected to be INR1,500-1,700 crores, indicating a robust expansion pipeline.

Solar Grade DHF Leadership & Future Outlook

The solar grade DHF business is fully ramped up and running at full capacity, with 80-85% of its output contracted. TANFAC maintains its position as the country's sole domestic supplier, benefiting from its rapid execution, proprietary/bought technologies, and stringent customer approval processes. Management expects this segment to continue witnessing strong demand, driven by the expanding solar manufacturing ecosystem in India, and plans to almost double its solar grade DHF capacity.

Robust Revenue and Margin Guidance

Management provided robust growth guidance, targeting at least 30% revenue growth for FY27 and over 60% for FY28, driven by new projects and ramp-ups. EBITDA margins are expected to improve to 16-19% from Q2 FY27 onwards and reach approximately 25% in FY28 once the HFC-32 project is fully operational. The HFC-32 project itself is expected to yield around 30% margins. The company also anticipates its export mix to increase from the current 10% to 50% post R-32 commissioning.

R&D Focus on Advanced Fluorine Products

The company's R&D team, led by Dr. L.R. Ravichandran, is actively working on 5-8 products in the pipeline, including hydrofluoroolefins, fluoropolymers, and electronic chemicals. While near-term focus is on solar grade DHF and AHF expansion, the R&D efforts are geared towards commercializing HFOs and high-performing fluoropolymers in 2.5-3 years, with announcements expected in FY28 and execution by 2029-2030. For semiconductor grade DHF, management expects a 1-1.5 year approval cycle before commercial revenues.

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