Gujarat Fluoro shares see their second-biggest jump of 2022 after ICICI Securities calls valuations reasonable

Gujarat Fluorochemicals’ (GFL) shares ended 9 percent higher on Monday, recording their second biggest gain in 2022 after ICICI Securities rated its valuations as reasonable.

ICICI Securities sees GFL’s fundamentals remaining robust with opportunities expanding even though the company’s stock price has corrected 25 percent in the last month.

The specialty chemicals stock trades at a reasonable Price to Earnings valuation of 19.5x financial year 2024 earnings and 13.2 times financial year 2024 enterprise value-to-EBITDA, according to the brokerage.

The specialty chemicals market has been turning favorable for integrated players, which consequently puts GFL in a sweet spot as it is fully backward integrated for the entire fluoropolymers business.

Further, the prices of polytetrafluoroethylene (PTFE) are on a rise and have increased by approximately 40 percent to Rs 960 per kg so far in the current financial year 2022-23 compared to the previous one.

As Gujarat Fluorochemicals is the sole manufacturer of PTFE in India, the rise in prices of the said polymer will prove to be beneficial for the company. The spreads have not improved materially though due to high power costs, according to ICICI Securities.

Further, the company’s export revenue from new fluoropolymers has improved from Rs 100 crore in financial year 2020 to Rs 450 crore so far in the current year.

Shares of Gujarat Fluorochemicals ended 9.3 percent higher at Rs 3,027.