ICICI Securities Limited, one of the largest brokerage companies in the country, has issued a purchase notice for the shares of Gujarat Fluorochemicals Limited (GFL). The stock of Gujarat Fluorochemicals Limited (GFL) has soared by more than 300% in the last year, bringing huge returns to investors. The stock price rose by approximately 330% last year, from 577.75 rupees to 2.488 rupees. Gujarat Fluorochemicals Limited (GFL) is an Indian chemical company with leading expertise in fluoropolymers in the country.

  According to the research report of the brokerage firm, “GFL is in the best position in terms of fluoropolymers, and its demand is increasingly being driven by vertical industries in the new era such as batteries, solar panels and green hydrogen. GFL is in The process of expanding its fluoropolymer production capacity has provided visibility to our growth during the forecast period (FY21-FY24E). GFL has also expanded to other fluoro derivatives used in the vertical field of the new era, which has expanded the company’s potential market and Provides prospects for continued growth. GFL has formulated a bold capital expenditure plan of 25 billion rupees for the next three years. FY21-FY24E (despite a low base) and RoCE (after tax) increased from 6.7% to 18% in the same period. Despite strong earnings prospects However, GFL’s price-to-earnings ratio is reasonable at 20 times in FY24, while Navin Fluorine is 42.1 times and SRF is 27.5 times.” ICICI Securities claims, “Compared with FY21-FY24E (58% of GFL’s revenue), fluoropolymers Revenue will grow at a compound annual growth rate of 32.9%. GFL achieved full capacity utilization of PTFE in the second quarter of fiscal year 2022, and plans to expand its production capacity by 25% through planned capital expenditure in fiscal year 23 by 25 billion rupees. It There are already enough R-22 and TFE production capacity; therefore we expect the asset turnover rate to increase by 1.5-1.6 times. The new fluoropolymer division has only achieved a capacity utilization rate of 65%, and GFL expects it to be fully utilized soon The company is adding 57% of its new fluoropolymer production capacity, including key PVDF, FKM and micropowders. It also launched I-SAN, which is used in flame retardants. This is revenue from fluoropolymers. Growth provides visibility, and the higher contribution of the product portfolio should also help profit margin expansion. GFL is also being integrated into R-142B backwards, which will help expand PVDF in the future." Reasons for investment According to the research report, "Gujarat Fluorochemicals (GFL), with its huge fluoropolymer product portfolio, has a place in materials used in vertical industries in the new era, such as lithium-ion batteries, solar panels, and hydrogen fuel. Batteries. PVDF, PTFE. Fluoropolymers such as FEP and FEP will be well applied in these vertical fields. In addition, GFL is planning to make capital expenditures for certain new fluorine derivatives, which we think can expand its marketability in the new era. Market.” The broker further said: “We believe that entering a new era of verticals will enable GFL to lead Indian counterparts in high-performance materials, and may prove the key to the company’s long-term growth. In addition, the backward integration of GFL for most of these materials Will prove to be a high barrier to entry for others. During our forecast period, the revenue contribution of the new era vertical industry is very small, but at least it is in line with the success of Indian OEMs. Execution and long-term contracts can prove to be an icebreaker and will be the key to viewing. "Purchase Gujarat Fluorochemicals Limited (GFL) at a target price of Rs. 3,086 (50% increase from CMP). According to the broker’s call, "We are starting the coverage of Gujarat Fluorochemicals with a buy rating and a target price of Rs 3,086. , The stock is valued at 30 times FY24E earnings per share (price-to-earnings ratio). The 30 times PE multiple is based on the market capitalization weighted average PE multiple of other Indian fluorine companies. Our target price means that the EV/EBITDA multiple is 18.7 times FY24E. "Disclaimer. The stock is selected from the brokerage report of ICICI Securities Limited. Investing in stocks brings the risk of financial loss. Therefore, investors must proceed with caution. Greynium Information Technologies, the author and the brokerage firm are responsible for any No responsibility for loss.

According to the broker’s research report, “GFL is at its best in terms of fluoropolymers, and new era vertical industries such as batteries, solar panels, and green hydrogen are increasingly driving the demand for fluoropolymers. GFL is expanding its Scope of business. The production capacity of fluoropolymers provides visibility for our growth during the forecast period (FY21-FY24E). GFL has also expanded to other fluorine derivatives used in vertical fields in the new era, which has expanded the company’s potential market and Provides continued growth prospects. A bold capital expenditure plan of 25 billion rupees has been formulated for the next three years. Compared with the 21-24 fiscal year, its profit may grow at a compound annual growth rate of 45.9% (although the base is low), And RoCE (after tax) increased from 6.7%"

ICICI Securities claims, "Compared with FY21-FY24E (58% of GFL's revenue), fluoropolymer revenue will grow at a compound annual growth rate of 32.9%. GFL has achieved full capacity utilization of PTFE in the second quarter of fiscal year 2022. It plans to expand its production capacity by 25% through planned capital expenditures by 25 billion rupees in FY23. It already has sufficient R-22 and TFE production capacity; therefore, we expect the asset turnover rate to increase by 1.5-1.6 times. The new includes The fluoropolymer division achieved only 65% ​​capacity utilization, and GFL expects it to reach full utilization soon. The company is adding 57% of new fluoropolymer capacity, including key PVDF, FKM and micropowders. It also launched I-SAN, which has been used in flame retardants. This provides visibility into the revenue growth of fluoropolymers, and the higher contribution of the portfolio should also help profit margin expansion. GFL is also moving towards After integration into R-142B, this will help expand PVDF in the future."

The brokerage stated in its research report that “Gujarat Fluorochemicals (GFL), with its huge fluoropolymer product portfolio, has a place in materials used in vertical industries in the new era, such as lithium-ion batteries, solar panels, and hydrogen fuel cells. "Fluoropolymers such as PVDF, PTFE and FEP will be well applied in these vertical fields. In addition, GFL is planning to make capital expenditures for certain new fluorine derivatives, which we believe can expand its potential market in the new era of market segments. "

The broker further stated: “We believe that entering a new era of verticals will enable GFL to lead its Indian counterparts in high-performance materials, and may prove the key to the company’s long-term growth. In addition, the backward integration of most of these materials by GFL will prove beneficial to others. It is a high barrier to entry for people. During our forecast period, the revenue contribution of the new era vertical industry is very small, but at least the successful execution and long-term contract with India OEM can prove to be an icebreaker and will be the key to watching ."

According to the broker’s call, “We are launching a report on Gujarat Fluoride, with a buy rating and a target price of Rs 3,086. The stock is valued at 30 times FY24E earnings per share (price-to-earnings ratio). The 30 times price-to-earnings ratio is based on market value. The weighted average PE multiple of other Indian fluorine companies. Our target price implies an EV/EBITDA multiple of 18.7 times FY24E."

The stock was selected from the brokerage report of ICICI Securities Limited. Investing in stocks brings the risk of financial loss. Therefore, investors must proceed with caution. Greynium Information Technologies, the author and the brokerage company shall not be liable for any losses caused by the decision based on this article.