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Prabhudas Lilladher Report
It took more than seven decades to isolate the magicis elementum – Fluorine, an effort that landed the French chemist Henri Moissan with a Nobel in 1906. Since then, there has been no looking back for fluorinated chemicals, with increasing applications in refrigeration, life sciences, agrochem and polymers.
We believe that Indian fluorochemical companies are well placed to capitalise on growing fluorination demand in mass markets given-
global refrigerant market to expand at 6.4% compound annual growth rate over FY23-28E (to reach $9 billion by 2028),
remarkable 64% of new chemical entities approved by Food and Drug Administration in CY22 made use of fluorination chemistry, almost double of 34% witnessed in CY15,
11 out of 15 new ISO assigned agrochemicals in 2022 had fluorination in their chemistry compared to 6 out of 17 in 1998 and
fluoropolymers finding applications in newer areas like battery membranes and solar films.
While fluorochemicals are battling lack of consistent data, user industries like pharma and agrochemicals with size of $516 billion and $228 billion in CY22 are expected to grow by 7.7% & 3.0% CAGR respectively in CY23-30.
Considering strong potential upside and huge demand uptick in the industry, we initiate coverage on three fluorochemical companies: Navin Fluorine International Ltd. with ‘Accumulate’ rating at target price of Rs 5064 valuing at 40 times September-25 earnings per share of Rs 127, Gujarat Fluorochemicals Ltd. with ‘Accumulate’ rating at target price of Rs 3230 valuing at 25 times Sep-25 EPS of Rs 129 and SRF Ltd. with ‘Hold’ at target price of Rs 2143 valuing at implied consolidated Sep’25 enterprise value/Ebitda of 11 times).
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