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TANFAC Industries Ltd. — Q4 FY26 earnings call

Call held 16 May 2026

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

Management summary

Tanfac Industries reported its highest ever revenues for Q4 and FY26, driven by successful capacity expansions in hydrofluoric acid and solar grade DHF. The company secured significant long-term contracts, providing strong growth visibility. However, profitability metrics like EBITDA and PAT saw compression due to raw material price increases and margin normalization, though management expects improvement with new product contributions.

Highlights

  • Revenue from operations grew 27.6% YoY to INR 711 crores in FY26 from INR 557 crores in FY25.

  • Successfully doubled hydrofluoric acid capacity from 15,000 MTPA to 30,000 MTPA with a low investment of INR 100 crores.

  • Commissioned 20,000 MTPA solar grade DHF project, making Tanfac the first and only manufacturer in India.

  • Secured orders worth INR 1,068 crores for solar grade DHF and INR 3,612 crores for fluorinated products, providing strong visibility.

  • Working capital cycle improved by 8 days to 91 days in FY26, reflecting enhanced operational efficiency.

Concerns

  • EBITDA margin declined to 16% in FY26 from 23% in FY25, attributed to margin normalization and increased raw material costs.

  • PAT decreased by 20.5% YoY to INR 70 crores in FY26 from INR 88 crores in FY25, impacted by lower operating profit and higher depreciation.

  • Sulphur prices increased from INR 30/kg in FY25 to INR 38-40/kg in FY26 due to geopolitical events, impacting gross margins despite pass-through with a lag.

Key financials

  1. Revenue ₹711 Cr +27.6%YoY
  2. EBITDA ₹112 Cr -13.2%YoY
  3. EBITDA Margin 16%
  4. PAT ₹70 Cr -20.5%YoY
  5. PAT Margin 10%
  6. Working Capital Cycle 91 days

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.

Order book

high confidence

Total value

₹4,680 Cr

as of 2026-05-16 quantified

Execution

executable over next 3.5 to 7 years

Composition

Mix 2 products
  • Solar Grade DHF 22.8%
  • Fluorinated Products (including HFC-32) 77.2%

Share of order book by product

The company has secured significant long-term contracts for solar grade DHF and other fluorinated products, providing strong revenue visibility for the coming years. HFC-32 contracts cover 65% of the proposed capacity, with a significant portion for exports.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹495 Cr INR 100 crores from promoters by way of preferential allotment and remaining INR 300 crores by way of QIP and term debt for R-32 capex.
    • HFC-32 manufacturing facility ₹405 Cr
    • Other value-added fluorinated products ₹90 Cr
    As a part of this strategy, we have already announced a capital expenditure plan of approximately INR495 crores. This includes INR405 crores towards HFC-32 and approximately INR90 crores towards other value-added fluorinated products. This INR495 crores will be used towards setting up a 20,000 metric tons per annum downstream fluorinated products manufacturing facility at our existing Cuddalore site. ... So for that, particularly for this total capex, INR405 crores is for the R-32. So we are planning to raise around INR400 crores, out of which INR100 crores will be from the promoters by way of the preferential allotment and remaining INR300 crores by way of QIP and term debt.

Guidance & targets

Revenue

  • Revenue Target Revenue · FY28 · Medium confidence INR 1,600-2,000 crores
    Yes. FY28 I think we should be close to around INR2,000 crores, INR1,600 to INR2,000 crores because the new HF plant would also be operational at that time.

    — Hemango Gupta

  • Revenue Target Revenue · next five years · Medium confidence INR 3,000-3,500 crores
    So our aim is to get to almost INR3,000 to INR3,500 crores in next five years.

    — Hemango Gupta

  • Revenue from R-32 Capex Revenue · annually · High confidence INR 900-1,000 crores
    So this out of INR495 crores, for this R-32 is around INR405 crores. And this gives us a revenue of around INR900 to INR1,000 crores revenue every year.

    — Afzal Malkani

Profitability

  • EBITDA Margin Profitability · future · Medium confidence 15-18%
    Going forward, we expect operating EBITDA margins to remain range-bound around 15% to 18% from existing line of business.

    — N.R. Ravichandran

  • EBITDA Margin Increase (with R-32) Profitability · this year (with R-32 revenue) · Low confidence 3-4%
    So margin probably we are expecting to remain same percentage margin this year also. But with the last quarter of getting R-32 revenue, I think the margins may increase by 3% to 4%.

    — Hemango Gupta

Capacity

  • HFC-32 Plant Commissioning Capacity · Q3 FY27 · High confidence Q3 FY27
    The project is progressing well and remains on track for the commissioning by Q3 in the year FY27.

    — Hemango Gupta

  • Additional AHF Capacity Announcement Capacity · next few months · Medium confidence 30,000 tons
    No, Siddharth, that is not included. In fact, we are going to announce it in next few months, that 30,000 tons of capacity.

    — Hemango Gupta

  • New HF and Solar Grade Plant Commissioning Capacity · within 11-12 months · High confidence June '27
    Yes, so, before that we need to go for the HF plant that we may announce after two-three months and we may just for example we can start after four months. So simultaneously we will go for the solar grade also. So within 11 to 12 months, the HF and new solar grade plant will come together. So we can consider June '27.

    — Afzal Malkani

Capex

  • Future Capex Capex · next 3-5 years · Medium confidence INR 500-700 crores
    Yes, but definitely we will go for the expansion after this R-32 project is over. But to answer your question, yes, next three to five years we will invest another INR500 to INR700 crores.

    — Hemango Gupta

HFC-32

  • HFC-32 Production Cost HFC-32 · future · Medium confidence INR 240-280 per kg
    See, difficult but I'll give you just an approximate figure. It will be between INR240 to say INR280 range per kg.

    — Hemango Gupta

  • HFC-32 Payback Period HFC-32 · future · High confidence less than four years
    See, payback period for the proposed HFC project, we expect it will be less than four years.

    — N.R. Ravichandran

What to watch in Q1 FY27

HFC-32 Plant Commissioning

Q3 FY27
Current Under construction, progressing well
Target Commercial operations by Q3 FY27

Why it matters

Successful commissioning is key to realizing the projected INR 900-1,000 crores annual revenue and improving EBITDA margins.

The project is progressing well and remains on track for the commissioning by Q3 in the year FY27.

Risks & concerns

  • R-32 Quota Allocation Uncertainty

    high

    The allocation of HFC-32 production quotas by the government in 2027 is critical for the new plant, with management relying on the stated policy but analysts raising concerns about competition from incumbents.

    Analyst acknowledged

  • Raw Material Price Volatility

    medium

    Increased sulphur prices due to geopolitical events impacted margins in FY26, though the company has a mechanism to pass on costs with a lag.

    Management acknowledged

  • Project Execution and Commissioning Delays

    low

    While management highlighted a strong track record of timely project execution, large-scale capex projects like HFC-32 and new AHF/solar grade DHF plants inherently carry execution risks.

    Management downplayed

Q&A highlights

6 direct, 1 evasive
R-32 Quota Allocation and Government Policy Direct
The quota, Harsh, will be decided in 2027 and it rests with the government. So, but the -- it will be decided in '27, but we have got a clean EC to manufacture this. So we are going ahead. And if you want details on quota, I think I can give it to you. You want details?

Analyst sought clarity on the R-32 quota, a critical factor for the new HFC-32 plant, and management explained the government's role and timeline for decision.

Asked by Harsh Shah

Confidence in HFC-32 Quota Amidst Incumbent Capacities Evasive
So the first question I've already explained when Harsh asked. I've detailed the office memorandum, I have quoted, the office memorandum clearly states this. And implementation of, I am quoting, right, clause number three, 'implementation of an appropriate framework permitting HFC production after taking into account the production capacity of the operational units as on 1/1/2028 as per the HFC phase-down schedule of the Montreal Protocol.

Analyst pressed on how Tanfac expects to secure quota given existing players, but management reiterated reliance on government policy and avoided direct comparison or further specifics.

Asked by Rohit Nagraj

Raw Material Sourcing for New Projects (Fluorspar & Sulphur) Direct
Number two, we are tied up for fluorspar, and we generally have annual contracts for fluorspar. So fluorspar availability is not an issue. Fluorspar, if you see, calculate the world's fluorspar mines and the availability, it is available for next 90 to 100 years. So that is not an issue. Sulphur, due to West Asian crisis, the price is going up, but the availability is there.

Analyst inquired about raw material security for new expansions, and management confirmed long-term availability for fluorspar and ongoing sourcing for sulphur despite price increases.

Asked by Rohit Nagraj

Realization and Margin Difference: Solar Grade DHF vs. Normal AHF Direct
Solar grade gives us about INR15 to INR20 per kg extra realization than the normal merchant grade, industrial grade of HF. ... Cost, about INR3 to INR4 or INR5 maximum would be the cost for making from industrial grade to solar grade. So our, you know, margins improve by around INR10 to INR15 per kg in case of solar grade.

Analyst sought to understand the profitability of the new solar grade DHF, and management provided specific figures on higher realization and improved margins.

Asked by Siddharth Gadekar

Reasons for Gross Margin Decline in FY26 Direct
FY25 we had a very good Q3, an unusual Q3 where the realizations were also high and cost was also less. So we had a very good Q3, that is the reason. But apart from that, the prices of sulphur has increased in FY26, used to be around INR30 per kg in FY25, increased up to INR38 to INR40 per kg as an average consumption rate I am saying. And it has also further increased during this quarter. Okay. So that is the reason the EBITDA margin, gross margin has come down.

Analyst questioned the margin compression, and management provided a detailed breakdown of contributing factors including raw material costs and one-off events.

Asked by Akash Dobhada

Raw Material Price Pass-through Mechanism Direct
So definitely there is a significant increase in sulphur and fluorspar logistics cost. We have been able to pass on but definitely there is a lag of around 30 to 40 days. So that's only, we are running on that. Otherwise we are able to pass on 100% cost increase to our customers.

Analyst asked about the company's ability to manage raw material price volatility, and management clarified their 100% pass-through with a typical 30-45 day lag.

Asked by Anuj Haria

Contingency and Penalties in HFC-32 Contracts Partial
See, these contracts are done in good intention. So there is no penalty clause due to this or anything. Once we start the production, and then the penalty clauses starts, if we are not able to supply from my production or they are not able to buy vice versa also is true.

Analyst probed the legal validity and penalty exposure of HFC-32 contracts given quota uncertainty, and management stated no penalty for quota issues but mutual penalties once production starts.

Asked by Nitesh Dhoot

Revenue Potential from R-32 Capex Direct
So this out of INR495 crores, for this R-32 is around INR405 crores. And this gives us a revenue of around INR900 to INR1,000 crores revenue every year.

Analyst sought quantification of the financial impact of the new HFC-32 capex, and management provided a clear annual revenue projection.

Asked by Rajesh Gupta

3 min read 6 chapters

Detailed narrative

Q4 & FY26 Financial Performance Overview

Tanfac Industries achieved its highest ever quarterly revenue of INR 193 crores in Q4 FY26 and a record full-year revenue of INR 711 crores for FY26, representing a robust 27.6% year-on-year growth from INR 557 crores in FY25. Despite this top-line performance, the company experienced a decline in profitability, with EBITDA margin contracting to 16% in FY26 from 23% in FY25, and PAT falling to INR 70 crores from INR 88 crores. This was primarily attributed to the normalization of margins, increased raw material costs, and higher depreciation expenses.

Strategic Capacity Expansions and Market Positioning

The company successfully completed significant capacity expansions, doubling its hydrofluoric acid capacity from 15,000 MTPA to 30,000 MTPA with a capital investment of approximately INR 100 crores. A major milestone was the commissioning of a 20,000 MTPA solar grade DHF project, establishing Tanfac as the first and only manufacturer of this product in India. These expansions reinforce Tanfac's position in high-growth sectors like solar photovoltaic and semiconductors, leveraging its integrated fluorochemical manufacturing platform.

Entry into Refrigerant Gases (HFC-32) and Future Growth Drivers

Tanfac is making a strategic entry into the refrigerant gases segment with a planned capital expenditure of INR 495 crores, of which INR 405 crores is specifically for HFC-32. This investment will establish a 20,000 MTPA downstream fluorinated products manufacturing facility, expected to be commissioned by Q3 FY27. This move targets the rapidly growing global HFC-32 market, projected to reach 485 KT by 2030, and India's demand, which is anticipated to double to 45-50 KT in the next 4-5 years. The company has already secured contracts covering 65% of this proposed capacity.

Strong Order Book and Revenue Visibility

The company has built a substantial order book, securing approximately INR 1,068 crores in solar grade DHF orders expected to be executed over the next 3.5 years. Additionally, long-term supplier arrangements for fluorinated products aggregate to INR 3,612 crores over a period of 5 to 7 years. These contracts provide strong revenue visibility and underscore customer confidence in Tanfac's capabilities and product quality. Management aims to achieve INR 1,600-2,000 crores in revenue by FY28 and INR 3,000-3,500 crores in the next five years.

Raw Material Cost Management and Margin Outlook

Raw material costs, particularly for sulphur, increased from INR 30/kg in FY25 to INR 38-40/kg in FY26, primarily due to geopolitical factors in the West Asian region. While Tanfac passes on 100% of these cost increases to customers, there is a typical lag of 30-45 days. Management anticipates EBITDA margins to stabilize in the 15-18% range for existing businesses, with a potential 3-4% increase in margins once revenues from the new R-32 plant start contributing in the last quarter of the year.

R&D and Product Diversification Strategy

Tanfac is actively focusing its R&D efforts on developing next-generation fluorinated products, including specialty fluoropolymers, battery chemical applications, and electronic grade chemicals. This strategy aims to cater to emerging high-growth and high-profitability sectors, ensuring a diversified product portfolio. The company also plans to strengthen backward integration capabilities through the expansion of HF and Sulphuric acid capacities to support its HFC-32 production.

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