KR Choksey has given Accumulate recommendation for Gujarat Fluorochemicals with a target price of Rs. 2346 in its research report issued on Nov 12, 2021
KR Choksey’s research report on Gujarat Fluorochemicals
In Q2FY22, GFL reported revenue of INR 9,640 Mn showing a robust growth of 56.16% on YoY basis and 5.71% on QoQ basis. Such strong performance was mainly driven by higher realisations and volume growth. On operational front EBITDA in Q2FY22 stood at INR 2,955 Mn which was up by 88.22% YoY and 15.84% QoQ. EBITDA margins increased by 522bps YoY, and 268 bps QoQ to 30.65% in Q2FY22. Margins improved on account of lower raw material costs and power & fuel costs. Net Profit in 2QFY22 came at INR 2,049 Mn (+159.04% YoY / +35.52% QoQ), with NPM at 21.26% (+844 bps YoY / +467 bps QoQ). Lower finance costs helped the company deliver better margins during the quarter. EPS during the quarter came at 18.66 against 7.21 in the same quarter last year. Cash Flow from Operations doubled to INR 4,678 in 1HY22 against INR 2,184 in 1HY21.
We continue with our ‘ACCUMULATE’ recommendation and apply P/E multiple of 36x to its FY24E earnings, which yields an increased revised target price of INR 2,346 per share (old target price – INR 2,201).