Revenue surges, but faster costs trim Gujarat Fluorochemicals' margin
The presentation attributes growth to R32 and LiPF6 volumes, while YoY cost growth of +52.13% outpaced revenue growth of +45.45%.
Filed 03 Nov 2026, 14:13 IST · Gujarat Fluorochemicals Ltd (FLUOROCHEM)
Key takeaways
- Consolidated revenue rose +45.45% YoY, but faster expense growth cut operating margin by 3.2 percentage points to 26.88%.
- Net profit increased +34.08% YoY despite a 1.96-percentage-point rise in the tax rate, while other income was only 2.95% of pre-tax profit.
- The stock gained +3.61% after the results, close to its 3.0% median absolute post-results move despite an even 4-up, 4-down history.
Price around the results
R32 and LiPF6 volumes drove the revenue step-up
Consolidated revenue grew +45.45% YoY and +10.83% QoQ, with operating profit rising more slowly at +29.95% YoY. Management said the fluorochemicals performance was driven by higher R32 sales and demand across the broader refrigerant portfolio. It also said LiPF6 sales reached five major global electrolyte players as production was progressively ramped up.
Costs outpaced sales and interest rose sequentially
Expenses increased +52.13% YoY against revenue growth of +45.45%, reducing operating margin by 3.2 percentage points; sequentially, expenses grew +10.95% versus revenue growth of +10.83%, trimming margin by 0.07 percentage points. Interest expense rose +53.85% QoQ, adding pressure below operating profit. Other income accounted for only 2.95% of pre-tax profit, so it was not a major driver of earnings, while the higher YoY tax rate of 29.2% also restrained net-profit growth.
Margin recovered from Q4FY26 but remains below last year
Operating margin fell from 30.08% in Q2FY26 to 24.21% in Q3FY26 and 22.5% in Q4FY26, before recovering to 26.95% in Q1FY27 and edging down to 26.88% this quarter. The margin was 12.7 percentage points above the 14.18% median for the 92 Commodities peers that had reported, but the sequential rebound has paused.
Management points to new fluoropolymer and battery-materials capacity
Management said commercial supplies of PVDF and PTFE grades under long-term agreements are now expected to start from Q4FY27, and that R134a production is also expected to commence by Q4FY27. The company said production is being ramped up across new battery-materials plants and that it plans total battery-materials capex of Rs 6,000 cr by FY28, with a target of 25%+ EBITDA margin. Management also said domestic electrolyte demand is expected to pick up towards the end of the next financial year.
Market reaction was close to the stock's usual range
The stock rose +3.61% on the results day, with trading volume at 3.15 times the reference level. That move was close to the 3.0% median absolute move after the last eight results, during which the stock rose four times and fell four times.
Q2FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,760 cr | ₹1,588 cr | +10.83% | +45.45% |
| Other income | ₹10 cr | ₹10 cr | +0.00% | +66.67% |
| Expenses | ₹1,287 cr | ₹1,160 cr | +10.95% | +52.13% |
| Operating profit | ₹473 cr | ₹428 cr | +10.51% | +29.95% |
| Operating margin (%) | 26.88% | 26.95% | — | — |
| Interest | ₹40 cr | ₹26 cr | +53.85% | +21.21% |
| Depreciation | ₹104 cr | ₹102 cr | +1.96% | +14.29% |
| Profit before tax | ₹339 cr | ₹310 cr | +9.35% | +37.80% |
| Tax | ₹99 cr | ₹91 cr | +8.79% | +47.76% |
| Net profit | ₹240 cr | ₹219 cr | +9.59% | +34.08% |
| EPS (₹) | ₹22.11 | ₹20.17 | +9.62% | +35.56% |
Operating margin of 26.88% compares with a Commodities sector median of 14.18% across 92 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +3.61% | +2.03% |
Volume on the results session was 3.15× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- LiPF6 sales reached five major global electrolyte players while production was progressively ramped up.
- Fluorochemicals performance was primarily driven by higher R32 sales and healthy broader refrigerant demand.
Guidance & outlook
- Commercial supplies of PVDF and PTFE grades under long-term supply agreements are expected to commence from Q4FY27.
- Domestic electrolyte demand is expected to pick up towards the end of the next financial year.
- Fluoropolymer demand momentum is expected to remain resilient, supported by continued volume growth.
- R134a production is expected to commence by Q4FY27 and drive segment revenue and profitability.
- The company targets total battery-materials capex of Rs.6000 crore by FY28, two-times asset turnover and a 25%+ EBITDA margin.
Expansion
- New battery-materials plants are being added as production is progressively ramped up to meet customer demand.
- Further substantial battery-materials capacity expansions are underway.
- The company plans to set up an NGAAM anode facility.
- The company plans total battery-materials capex of Rs.6000 crore by FY28.
New orders
- The company has multi-year order visibility for battery-materials demand.
New products
- The company is developing higher-end LFP grades.
New initiatives
- The company is progressing towards developing higher-end LFP grades.
- Customer-specific electrolyte formulations are being developed and supplied for evaluation and qualification.
Competition
- Full utilisation of R32 capacity is expected to further strengthen the company’s market position.
Problems & risks
- Bulk Chemicals revenue declined due to lower caustic soda prices and higher captive chloromethanes consumption for R32 production.
- Bulk Chemicals revenue declined 5% year over year and 8% sequentially.
What to watch
- Whether operating margin holds around 26.88% after the 3.2-percentage-point YoY decline.
- Whether LiPF6 sales broaden beyond five major global electrolyte players as production ramps up.
- Whether Bulk Chemicals revenue recovers after management reported an 8% QoQ decline.