Gujarat Fluorochemicals share price rebounds after 5-month slump, surges over 17% in 12 sessions. Time to buy?

Gujarat Fluorochemicals has been flying high in recent sessions, with the stock gaining another 1% in Tuesday's intraday trade (September 23) to reach a 4-month high of ₹3,928 apiece, extending its winning run to the fifth straight session.

Over the last 12 trading sessions, the stock has rallied 17.5%, taking its September gain to 14.23% so far, a welcome relief after a five-month losing streak.

Looking ahead, while the outlook for fluoropolymers has improved following the imposition of anti-dumping duty on PTFE imports, the stock’s further momentum remains uncertain amid rising competition and delays in the ramp-up of EV battery chemicals.

The Directorate General of Trade Remedies (DGTR) has recommended the imposition of antidumping duty (ADD) on PTFE imported into India, especially from China and Russia, for a period of 5 years.

According to JM Financial, Gujarat Fluorochemicals (GFL) will benefit from the anti-dumping duty (ADD) because it controls 40–45% of the domestic PTFE market. However, the brokerage cautions that increasing competition in the market may reduce the total gains GFL can earn from the ADD.

Anti-dumping duty gains could be limited

In FY25, Gujarat Fluorochemicals (GFL) used about 70–72% of its PTFE production capacity, which translates to sales of around 17,000–18,000 tonnes. Out of this, domestic sales were likely 20–25% (about 3,500–4,500 tonnes), as per the brokerage analysis.

Meanwhile, the brokerage noted that SRF has a PTFE capacity of about 5,000 tonnes but operated at only 50% utilisation, meaning it sold around 1,400–1,800 tonnes in FY25.

Putting this together, India’s total PTFE market is estimated at 9,500–10,500 tonnes. Since SRF is ramping up production, the brokerage believes that GFL could face more competition in the domestic market. Hence, the benefit of ADD for GFL might not be on the entire volume.

"If GFL gets an ADD benefit of about USD 3–3.5 per kg on roughly 3,000 tonnes of sales, it could gain an additional ₹800 crore to ₹1,000 crore," said the brokerage.

Stock to remain range-bound in the near term: JM Financial

For Gujarat Fluorochemicals (GFL), the brokerage now factors in an additional EBITDA benefit of about ₹38 crore in FY26E, ₹88 crore in FY27E, and ₹110 crore in FY28E, leading the brokerage to raise its EBITDA estimates for FY26–28 by about 3–4% and EPS estimates by 4–7%.

It now expects the company to post a 29% CAGR in EBITDA and a 30% CAGR in EPS over FY25–28E. Based on these revisions, the brokerage revised its target price higher to ₹3,780 (up from ₹3,645 earlier).

However, in FY27–28, around 6–14% of the projected EBITDA is expected to come from EV battery chemicals, where there could be potential ramp-up delays. Along with this, the recent fire incident at one of GFL’s plants could also impact earnings.

Given these risks, it expects the stock to remain range-bound in the near term. Accordingly, it downgrades the rating from Hold to Reduce.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.