Sell Gujarat Fluorochemicals, target price Rs 2,800: Emkay Global Financial Services
Gujarat Fluorochemicals Ltd. with a target price of Rs 2,800. The current market price of Gujarat Fluorochemicals Ltd. is Rs 3272.3.
Gujarat Fluorochemicals Ltd., incorporated in the year 2018, is a Mid Cap company (having a market cap of Rs 36751.42 Crore) operating in Chemicals sector.
Gujarat Fluorochemicals Ltd. key Products/Revenue Segments include Fluorochemicals, Bulk Drugs & Chemicals, Export Incentives, Scrap, Other Operating Revenue, Carbon Credit for the year ending 31-Mar-2023.
Rationale
GFL's Q1 EBITDA declined 25% YoY to Rs2.6bn (+10% QoQ), on steady bulk and fluorochemicals businesses, while the fluoropolymers business saw a moderate sequential recovery in volume. The management affirmed its EBITDA guidance of Rs18-19bn, with a 1-2-quarter lag.
We believe that new capacities being commissioned in current year will take time to ramp up; thus, we factor in ~Rs14bn EBITDA into our estimates. We expect FY23 EBITDA to be achieved in FY26 (and not FY25), with a ramp-up in new fluoropolymer capacities for new-age applications and start of commercial supplies of EV products (LiPF6, electrolyte, and LFP). We believe a possible ramp-up in the battery chemicals business has already been factored into the CMP. We cut FY26E EPS by 6% to factor in the relatively slower ramp-up in fluoropolymers vs. our expectations. We maintain SELL and our TP of Rs2,800/sh (rollover to Jun-26E at 30x EPS).
Financials For the quarter ended 30-06-2024, the company has reported a Consolidated Total Income of Rs 1185.00 Crore, up
