Gujarat Fluorochem: Q1FY24| Recovery in H2?
There can be some errors as notes were taken while listening to the call.
-Q1 Rev was down by 9% YOY, console EBITDA at 329 crores- down by 24% YOY. EBITDA Margins at 29%, consolidated PAT at 201 crores.
-FP biz- prices are stable and vols have corrected marginally. Q2 will be similar to Q1 and expect normalisation from Q3 & Q4.
-Ref gases will do well in H2.
-Might be a little bit delay in fluoropolymers capacity utilisation. Remain positive. PVDF grades have been made and tested at Lab scale. Received positive feedback, approval process taking time- as the product needs to be tested in the battery. Expect to get the approval in next 1-2 Quarters.
-In PFA- some is going in Semi conductor application. There are different purity levels and grades. Supplying in basic level to one of the leading manufacturers, step by step going into higher grades. Into process of getting approvals for higher grades.
-Expecting blended realisations to go up in PTFE and New age fluoropolymers. Expect ref gases to improve from Q3 or Q4 onwards.
-PFAS regulation is more towards molecule which have mobility, which are bio accumulative. Fluoropoylmers as a set of compounds are very long chain. Not seeing FP to be part of any restrictions. There won’t be any problem in the product.
-FFKM applications are very specialised in space and semi conductors. High end materials for extreme application.
-In talks with Indian players for Electrolyte and salt supplies.
-R32: at this moment holding on with the plan of 10ktpa plant. Not going ahead with the plant looking at the global situation.
-PVDF solar will come online in Q2FY24. As requirement comes up- we will keep adding capacities. Plan to achieve 1900 tonnes per month- some of it may spill next year when it comes to current capex’s.
-Expect R125 to pick up in H2.
-In some fluoropolymers destocking is happening. For PVDF- there is slowdown in China due to which there is excess supply in the world. It’s a short term phenomenon, seeing it pick up again going forward.
-Capex plan may spill over to next FY as well. Entire 1500 may not happen this year.
-Premature to share the economics of battery chemicals- plan to get into various battery chemicals and even going into electrolytes.
-By Q1FY25- capacity will get fully utilised for fluoropolymers. Volumes are constrained by approval from the end customers. PTFE debottlnecking- have the TFE in place. As the market turns around- in position to capture that.
-Not seeing pricing pressure on the higher end grades in NEW FP. More to do with volumes as there is an element of destocking that is happening. Hope whole thing gets sorted by H2 of this FY.
-Most of our grades in FP are in the higher end grades.
-Expect approval to be in place by FY25 for Fluoropolymers. Capacity ramp up further takes time- time frame is 1-1.5 years.
-As we get approvals for 8 applications, we will commission the wind mills. By Q2 we will get the approvals, benefit will 20-25 crores of power cost savings.
-Expect margins to be in the range of 28-30%.
Disc: no recommendation to buy or sell.
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