Buy Gujarat Fluorochemicals: target of Rs 3086: ICICI Securities

ICICI Securities is bullish on Gujarat Fluorochemicals recommended buy rating on the stock with a target price of Rs 3086 in its research report dated December 01, 2021.

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ICICI Securities research report on Gujarat Fluorochemicals

We initiate coverage on Gujarat Fluorochemicals (GFL) with a BUY rating and target price of Rs3,086 (upside 50% from CMP). GFL is in a sweet spot with its presence in fluoropolymers, demand for which is increasing driven by the new-age verticals of battery, solar panel and green hydrogen. GFL is in the process of expanding its capacity in fluoropolymers, which provides visibility on growth during our forecast period (FY21-FY24E). GFL is also expanding into other fluorine derivatives used in the new-age verticals, which expands the company’s addressable market and provides a vista of sustained growth. GFL has laid out a bold capex plan of Rs25bn over the next three years. It is likely to see its earnings grow at 45.9% CAGR over FY21-FY24E (on low base though), and RoCE (post-tax) improve from 6.7% to 18% over the same period.

Outlook

Despite the strong earnings outlook, GFL is trading at a reasonable P/E multiple of 20x FY24 vs 42.1x for Navin Fluorine and 27.5x for SRF.

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