Gujarat Fluorochemicals (GFL) discussed its Q3 FY 2026 results, noting a challenging quarter impacted by seasonal weakness in refrigerants, the European holiday season, and U.S. tariff uncertainty. Management highlighted structural improvements following recent U.S. tariff reductions, signaling a constructive outlook. Significant focus remained on the Battery Materials business, where major investments from IFC and a sovereign fund underscore strategic confidence in the new growth vertical.
Q3 FY 2026 Performance Overview
Gujarat Fluorochemicals Limited (GFL) reported a challenging third quarter for FY 2026. Consolidated Revenue stood at Rs. 1,136 crores, a marginal decline of 1% year-on-year. EBITDA declined by 6% year-on-year to Rs. 275 crores, primarily attributed to headwinds in the refrigerant portfolio, specifically pressure from R-22 volume constraints due to quota reduction and seasonally subdued demand, alongside weak R-125 prices.
Management expressed confidence that the outlook is improving, particularly due to the recent reduction in U.S. tariffs from 50% to 18%, which is expected to restore competitiveness and support margin expansion in export markets.
Segment Performance Highlights
The Fluoropolymer segment delivered healthy growth of 14% year-on-year, although sequential revenue moderated due to tariff uncertainty. Management anticipates strong momentum moving forward, supported by structural demand from the semicon industry.
- Fluoropolymers: PFA demand, driven by semiconductor shortages and increasing memory chip prices, is expected to grow as customer approvals ramp up. Fluoroelastomer business is also seeing growth supported by increased vehicle sales.
- Fluorochemicals: Revenue declined 33% YoY, largely due to the refrigerant business slowdown. Specialty chemicals remained subdued.
- Bulk Chemicals: Revenue declined YoY, primarily due to lower prices in chloromethanes and caustic soda.
Battery Materials Business: Strategic Focus and Investment
The battery materials business remains a key strategic focus. Management confirmed significant external validation of their strategy:
- The International Finance Corporation (IFC) approved an investment of Rs. 430 crores in the subsidiary, GFCL EV Products Limited.
- Another sovereign fund approved an investment of $82 million in the battery materials business.
- GFL is setting up a greenfield advanced battery materials project in Oman with an estimated investment of $216 million, which is included in the overall Rs. 6,000 crores CAPEX plan.
Commercial Traction and Timeline
Commercial traction has begun for key products:
- LiPF6 Salt: Commercial supplies commenced in December 2025, with repeat orders received in Q4 FY 2026. Pricing is based on a formula referencing lithium carbonate.
- LFP Cathode Active Material (CAM): Plant operations stabilized; sample dispatches are underway with qualification progressing.
- Fluoropolymer Binders (PVDF/PTFE): Qualification is progressing, with commercial operations expected in the first half of FY 2027. PVDF business will start first, with PTFE binder capability noted in light of potential dry process adoption.
Management expects the entire battery facility to reach full utilization by 2027 or 2028, with FY 2027 and FY 2028 being significant growth years for this vertical.
Working Capital and R-32 Production Update
On working capital, the target range is being adjusted slightly higher to 170 to 180 days, acknowledging the current higher level of 201 days due to temporary inventory builds related to tariff uncertainty.
Regarding R-32 production: The first phase of 20,000 tonnes is now commissioning early in the calendar year (after a slight delay). The overall capacity target of 30,000 tonnes remains the long-term intent, with the plant needing to be commissioned by December 2027 to utilize the full quota access.
Source: BSE
