Gujarat Fluorochemicals Ltd
NSE:FLUOROCHEM
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
Abbvie Inc
NYSE:ABBV
|
Biotechnology
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Realty Income Corp
NYSE:O
|
Real Estate
|
| US |
|
Walt Disney Co
NYSE:DIS
|
Media
|
| US |
|
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
2 690.3
4 481.82
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
Abbvie Inc
NYSE:ABBV
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Realty Income Corp
NYSE:O
|
US |
|
|
Walt Disney Co
NYSE:DIS
|
US |
|
|
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
This alert will be permanently deleted.
Gujarat Fluorochemicals Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Gujarat Fluorochemicals Q4 FY '24 Earnings Conference Call hosted by Batlivala and Karani Securities India Private Limited.
[Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Archit Joshi from Batlivala and Karani Securities India Private Limited. Thank you, and over to you, sir.
Thank you, good evening, everyone. On behalf of B&K Securities, I welcome you all to the Q4 FY '24 Earnings Conference Call of Gujarat Fluorochemical Chemicals Limited. We have with us today Dr. Bir Kapoor, CEO and Deputy Managing Director of the company along with his team. Without further ado, I'd like to hand over the floor to Dr. Bir Kapoor for his initial remarks, post which we can take questions from participants. Thank you, and over to you, sir.
Thank you, Archit. Good evening, everyone, and a very warm welcome to all of you on GFL's earnings call for the quarter and full year which ended on March 31, 2024. The company announced this quarter 4 and FY '24 results, at its Board meeting held today on 6th of May 2024. The results along with the earnings presentations are available on the stock exchanges and on our website. I will briefly talk about the numbers and then give you an update on the business operations and the outlook.
The company reported a consolidated revenue from operations for quarter 4 FY '24 of INR 1,133 crores, which is up by 14% quarter-on-quarter. Consolidated EBITDA for this quarter was INR 238 crores, which is up by 15% on a quarter-on-quarter basis. The EBITDA margins for quarter 4 FY '24 were 21%, which remained flat on a quarter-on-quarter basis. The consolidated PAT for this quarter was at INR 101 crores, which is up by 26% on a quarter-on-quarter basis.
On a full year basis for FY '24, the company reported a consolidated revenue from operations of INR 4,281 crores which is down by 25% on a year-on-year basis. Consolidated EBITDA was INR 955 crores with EBITDA margins at 22%. The consolidated PAT was at INR 435 crores with PAT margin at 10%, while the CapEx for the year was at INR 1,050 crores.
Let me briefly take you through the performance of each business segment for the quarter. The Bulk Chemical verticals saw improvement in volume from the previous quarter in which our plants ran at full capacity. However, the prices of caustic soda and MDC continue to remain subdued, because of increased supplies due to excess capacity creation, but we believe these prices have bottomed out, and we expect to see the improvements going forward in the subsequent quarters and perhaps in this financial year.
The Fluorochemicals segments also witnessed pickup in the volume of refrigerants. However, the prices remain sluggish. Overall, this business is expected to remain at similar levels for FY '25. The specialty chemical volumes and prices continue to be sluggish, due to dumping from overseas, which is from China and which impacted revenue and margins. The Fluoropolymer segment witnessed improvement in volumes during the quarter the prices remain stable. As we had guided in the previous call, we believe our core business segment, which is fluoropolymer, has already bottomed out, and we will see continuous growth in the subsequent quarters.
The exit of legacy players and the improvement in the utilization levels of new fluoropolymer capacities that were set up in FY '24 are expected to result in continued increase in sales. We have built sufficient capacity in the fluoropolymers to be able to deliver growth for the next years and perhaps in the next couple of years. The green shoots that were visible has started translating into numbers now, and I would reemphasize that we expect FY '25 to be far better as compared to FY '24 for this segment.
In our new battery chemical vertical, the details for which we had shared alongside our quarter 3 results, we are progressing well and it's going on as per our plans. We had commissioned our LiPF6 plant and now in the process of sampling and customer engagements. We expect to achieve commercial sales from this segment in the second half of FY '25. We have a CapEx target of INR 800 crores in this vertical in FY '25, and this segment is expected to be a major growth driver for GFL from FY '26 onwards. Our return ratios have been affected this year on account of drop in revenues and profitability. Also, we have incurred high CapEx, particularly in the EV battery materials space, which should start contributing meaningfully to the top line only after FY '26 onwards.
This year has been a challenging year for us. However, I can assure you that the growth fundamentals are firmly in place. We have continued to incur growth CapEx despite the macro headwinds as we believe that these headwinds are temporary, and we are very well placed to return to our growth journey very soon. As I have already communicated in the previous calls our financial performance have been bottoming out, and we are seeing a constant signs of improvement. This should continue going forward as we'll see continued growth over the quarters.
Before I close, let me also update you on the sustainability related initiatives. In 2023, S&P Global Corporate Sustainability Assessment, GFL's ESG score at 49 was significantly higher than the industry mean.
With this, I let the floor open for question and answer. Thank you.
[Operator Instructions] The first question is from the line of Rohit Nagraj from Centrum Broking.
Congrats on good set of sequential recovery. My first question is, sir, you mentioned in terms of fluorochemicals that has been dumping from China. So what is your assessment in terms of whether there are new capacities which have come in fluorochemicals and the same is applicable even for fluoropolymers, so just your views on the same?
Yes. I think, at least in my opening statement, when I mentioned about the dumping, I was referring primarily into the fluorochemical space. In fluoropolymers, which I have always -- I had always stated, is Advanced Materials segments and the grades that we are offering and the entire book of grades that we have. It is not impacted from the Chinese dumping at all. That was a statement of Chinese dumping was in context of the Fluorochemicals and the specialty fluorochemicals particularly, does this answer your question, Rohit.
Sorry. My second question is, sir, in terms of LiPF6, where are we currently in the validation process? And when do we expect actual commercial supplies starting to international customers? And in terms of the domestic market also, if we have any kind of timelines as to when the domestic manufacturing is likely to come up and whether they'll be starting serving them immediately once those facilities are commercialized?
See, we had indicated earlier in our February call that the revenue and the sales of battery chemical would start trickling in from the second half of this financial year. We are still on track with that. Samples are at the testing stages. And it takes certain time because battery chemicals are dependent a lot on very extensive and rigorous testing. And we expect to see revenue from this coming trickling in, I would say, and it will take almost 1.5 years for the revenue stream to become meaningful as I stated in my opening comment. So this is referring primarily to LiPF6. Now you asked about the Indian market. Indian market in EV...
The next question is from the line of Sanjesh Jain from ICICI Securities.
I'm going to start with the EV segment following up with what we said in the previous call. We anticipated a funding there. So our balance sheet today is almost 1.8x net debt-to-EBITDA, and we are expecting another INR 1,300 crores of CapEx in FY '25, and you want to do a total CapEx of INR 6,000 crores in the EV segment. Where are we in the funding? Because I think that remains a critical element to watch in a time where our stand-alone balance sheet now looks like it doesn't have too much of a headroom to fund that?
If you look at our CapEx plan, so we have always stated that going forward, the funding from the -- for the EV business, which we have shown as INR 800 crores is -- will come from the external funding. And we have already initiated that process. We had said that it takes 4 to 6 months. And we have appointed investment bankers and moving ahead with that. So it's going as per plan. And -- and in addition to that, we have also shared in our presentation GFL CapEx, which is INR 500 crores, will continue as per plan. which is essentially on the new fluoropolymers capacity addition that we had indicated earlier. Does that answer your question, Sanjesh?
There is a small problem. I think, operator could note this, your voice is getting blank in between. I don't know it's only for me or for everybody. Your voice is getting blanked in between. So I got the gist of it.
Is it better now?
I can hear you. We could hear you just that in between it goes completely.
I'm sorry, my apologies for that. Let's hope it doesn't.
So now I got that we are looking at the INR 800 crores to come from external. Is that the CapEx dependent on that we get the funding? Or do we have any other plans for it?
Not really. I think the business fundamentals are very strong on EV. Sanjesh, we had indicated that. So definitely, one of the options we had indicated is this funding. But other than that, we will look for alternate option if it doesn't come, but we'll continue with our plan.
So it's not dependent on that we do the funding, at least for FY '25 not beyond that?
Right, right. Because the growth fundamentals of the business is very strong, Sanjesh. And as you know, and we have always said it, it's an upcoming business, and we'll continue with our plan.
And where are you spending this INR 800 crores? Can you elaborate what is -- what are the [indiscernible]?
Essentially on the battery chemical and the product range that I described -- it's not really -- I cannot give you the specific names. But clearly, what we had indicated earlier was electrolyte salts okay, and cathode active materials and also the binders -- cathode binders. These are the broad categories in which we'd be investing.
That's fairly clear. A related answer -- a question again, is that where are we in the approval cycle for the battery grade PVDF and the semiconductor grade PFA?
The battery grade PVDF is already, as I said, that it's already in the process. It has gone to the level of the next level of approval that has gone to the electrochemical testings. All I can say it's at the final stages of getting approved, okay? And we are engaged with multiple OEMs. And as far as PFA is concerned for semicon, I had indicated that earlier as well that we are already supplying PFA to semiconductor applications. But we have been trying to upgrade into higher and higher segments within the same sector, and that journey is on as we speak right now.
Got it. You made a very interesting comment, sir, during your opening remarks that you are looking at the green shoots in the fluoropolymers. Is it across the category, PTFE, PFA, FKM and PVDF or it's more for the performance solution, which is PF and FKM and less PTFE?
The green shoot when I said it was with respect to -- you saw several quarters, our performances were subdued, particularly because of destocking. So the green shoot was in context that the destocking is phasing out, and there has been a pull in terms of demand. And those were the green shots. That's why green shoots that I mentioned. And that is all across -- that is all across. So that was definitely for PTFE as well as all our new fluoropolymers.
How has been the domestic market? It still continues to remain challenging for us?
It remained challenged in certain segments, partly because of the imports in certain lower-end grades from China, which has been a challenge. Otherwise, in higher-end grades, yes, it is fine. But in certain grades, particularly the granular, it has been a challenge, yes.
A couple of bookkeeping questions. One is on the operating cost quarter-on-quarter appears to be gone up very sharply. Why such a sharp jump in the operating cost for a company which is largely run continuous manufacturing? And #2 is in the working capital. We are now at 167 days, we were targeting below 120 days. It's a huge gap, which we bridged in the last 2, 3 years, but again, built up on that. So more clarity will be helpful.
Yes, sure, sure. I'll let Manoj answer that. But the broad answer for that is that we have added capacities and these are in the process of getting utilized. So that's where the some of the higher cost is coming up. But let me hand it over to Mr. Manoj Agrawal, who will answer it with a lot more details.
The operating cost is particularly higher at the year-end on account of year-end provision, one. Second, on account of discharge of the CSR obligations, two; third, some of the CapEx, which have gone on stream from operating expenses relating to those CapEx has gone as the P&L expenses now, so these are the 3 essential reasons. And fourth was the Red Sea crisis has incurred increase over movement expenses. So that is another additional impact, which has happened. So these are 4 reasons because of which operating expenses have gone up in this quarter.
And working capital?
And working capital is essentially as such, absolutely, it has not gone up. But because the sales were down, so it is a numerator and denominator impact. So a number of days is particularly higher in those finished goods areas because sales were down. As soon as sales picks up, it will improve.
[Operator Instructions] The next question is from the line of Rohan Gupta from Nuvama Institutional Equities.
Sir, first question is on fluoropolymer, I mean if you referred to your last con call, you mentioned that this year, FY '25, you see a significant growth in flouropolymers which will be primarily led by volume and almost taking us to previous year profitability. Sir, do you see that kind of pickup in flouropolymer has already happened? And overall, for this year, we can achieve those numbers which we were guiding in the last quarter, sir?
Yes, Rohan. We absolutely see that. And in fact, that's where when we -- when I mentioned in my opening comment, green shoots, that's where we say that we expect it to give us the results that we are looking for. So fluoropolymers, not only volume, we are also -- as we have added capacity with new fluoropolymers. The volume coming into new fluoropolymers and some of them are advanced grades. So it's a combination of the 2, the volumes plus value-added grade, which is coming in the new fluoropolymers. Combination of the 2 will give us what we are looking at and give or take a quarter here and there, which I've stated last time also. But the fundamentals are strong, and we are well within that range that we are targeting right now.
Okay. That's good to hear, sir. Question on the approvals which you mentioned in the PTFE for the battery grade. So you give answer on the previous question. Sir, it will be possible for you to share some more timelines related to that, that -- in terms of where we are in the approval cycle? I'm sure that you are dealing with multiple customers, but what kind of volume you think that your customers are -- have started giving you indication that we can build up for the current year and for the next year, more in PVDF, high-grade battery for the battery usage? And also if you can give some sense on LiPF and PFA?
Yes, Rohan, First of all, the approval cycle or approval process of PVDF is a complex process. It's at multiple stages. It's because since we are dependent on customers to do these testings and respond back to us. It will be difficult for me to give any specific timelines on this. However, typically, this process takes a long time, depending upon the customer, it can take definitely over 6 to 8 months and sometime beyond a year as well. But from our side, I think we are into the almost the final stages, which is the electrochemical test, which is going on with our customers.
Volume indications with respect to customer would be difficult for me to provide right now. But whatever we have planned or we have indicated the capacity in new fluoropolymer, I think we should be able to achieve that going forward.
Sir, just further on this, in last 3 months, a lot of work has been done with the battery manufacturers in India under the PLI schemes and many battery manufacturers have come forward. Are we in a process of also working with the very advanced stage with any of these domestic battery manufacturer? Or is still the focus is in export markets only?
We are working with almost all the battery manufacturers who are coming up in India, and we are well entrenched with their plans. And as and when -- because those capacities have not been set up yet, and those are -- some of them are starting now and it's at very, very early stages for Indian market. We expect Indian market, particularly the battery capacities to come from '25 mid onwards, okay? So it's almost still some time away. However, we are engaged with almost all of them in terms of all the 3 product categories that we talked about, and most importantly, on the electrolyte chemicals and binders.
The next question is from the line of Nitin Agarwal from DAM Capital.
Sir, just to get a couple of numbers just reiterate those numbers with you. Sir, on the fluorochemicals, did you -- just to reconfirm your guidance that you said will have a flat year on fluorochemicals this year?
Yes. In fact, fluorochemicals going forward in FY '24, '25 we expect to be on a similar level, maybe soften a little bit because fluorochemical for us includes refrigerants and specialty chemicals. In refrigerants, there have been certain headwinds you may be knowing about it, particularly the duty cut that has been there in U.S. market. And second is the phasing out of R-22 quota over a period of time. So both actually is expected to impact that. And the fluoro-specialty to some extent is stable for us, more or less because it's a relatively small vertical for us, and the prices have been subdued because of the Chinese or the imports -- low-cost imports. So we expect it to remain at the similar level or the slightly lower, not expecting any growth in that sector, that verticals particularly.
So sir, then given this sort of softening of outlook on this part of the business, we had earlier guided that FY '25 EBITDA would be similar or higher than F '23 EBITDA, do we still hold by this guidance, sir?
Yes, to some extent because as I've answered in the previous question, that it will be driven primarily by our fluoropolymer business. And we have stated that earlier also because the earlier numbers, let's say, if we go back and look at FY '23 numbers on refrigerants, there was in a way, it was inflated or higher because of R-125 and R-125, there was a sudden pickup in the market and the demand in the U.S. because of the high duty. So -- but those were in my view, opportunistic and those are not no more available. So the growth that we are seeing in fluoropolymers now or the overall growth, which will be led by fluoropolymers would be much more stable because this is led by now the newer capacity that we have already added over apart over the last 1 year or 1.5 years. And so this is correct that whatever we have seen going down with respect to the FY '23 in refrigerant fluorochemicals or the bulk chemical segment, which is because of the subdued prices would be made up by growth in fluoropolymers.
And if I get the last one on the fluoropolymers, now since there is so much growth expectation, which is there on the fluoropolymers. Our capacities. I mean, are there -- you mentioned that will growth -- our current capacities will take care of the growth for this year. And so at what stage do we need to meaningfully start putting up capacities to meet our fluoropolymer demand going from here on?
See, fluoropolymers have a natural growth level of, I would say, anywhere from 5% to 7%, depending upon fluoropolymer to fluoropolymers. Some fluoropolymers have a higher demand driven by certain sectors, which is either, for example, PVDF by EV or certain other fluoropolymers, which are going into semiconductor industry.
So fluoropolymer as a sector has a very strong fundamental and the growth rate. So we have put in capacities. And as I've said earlier, that we have invested a lot on the back end, which is the monomer capacities. So our current capacity addition that we have done will probably last for a year or maybe 1.5 years. And then further additions, I think, will depend on how the market unfolds, particularly in the rising segments of EV as well as semicon. So we will make investments there. Perhaps we will keep you updated in towards the second half of this year as the market situation evolves.
The next question is from the line of Divy Agrawal from eCom Family Office.
I had a couple of questions. So first is the -- regarding the capacity. So it would be helpful if you could give us the capacities of commodity product as well as the specialty products, grade-wise? It would be helpful for us.
Normally, I mean, we have -- we don't provide the details of the capacity for obvious reasons, along with the grades, I suggest this can be taken up off-line. And whatever we can provide. But otherwise, normally, we don't provide very specific grade-wise capacities. In fact, the way we have been guiding lately is more with respect to the investment and the asset turnovers.
Okay. Sure, sir. Understood, sir. It would be helpful, sir, if you could give us the -- help us with the utilization levels of maybe the commodity products or specialty fluoropolymers?
Yes. I should add Divy that this question can be taken offline, if that's fine with you.
The next question is from the line of Ketan Gandhi from Gandhi Securities.
Yes. Sir, you have mentioned about the legacy players being going out, and we may have fill in the gap. I believe after the exit of 3M, there is a vacuum as far as PFA is concerned because Chemours are -- I believe Chemours is unable to increase the capacity of the PFA for semiconductors. Is there any chance or are we looking at getting into the tools and go to the North American market as far as PFA is concerned, so that we can feel that gap, which is unable to fill by the Chemours?
Yes, certainly, we are -- that's one of the growth driver for us as we have indicated. And we are already supplying PFA to U.S. in certain markets. And we have capability as well as capacity to fill that gap and take over from whatever the market demand is available because of this leaving or the exit of legacy players. We are certainly moving in that direction and we have all the elements are in place. Yes, please.
Sir, how soon it can happen within the next 9 months or after the exit of the PFA?
See, it has already started happening because what happens is that the exit the exact exit is still some time away. It's probably January '25. So overall, what we are seeing is there's a pull from the customer size. PFA being a polymer, which is the high-end polymer, there's a qualification periods are long. So we are already seeing a pickup in demand and the interest from customers to qualify our material. So this is already happening as we speak. So we'll probably see results of that probably in the next few quarters. And it will ramp up. And that's where when I -- when we talk about our fluoropolymer story, that we expect significant growth quarter-by-quarter in next 3 quarters or 4 quarters. This is one of the driver for that is what you stated.
The next question is from the line of Hansal Thacker from Lalkar Securities.
Yes. Very encouraging to see the sequential turnaround in the company. So the question that I want to ask is partially answered with respect to operational expenses. But just wanted some clarity on the other expenses, particularly. I mean, they seem to be elevated above normal. So is there a one-off in this? Or this is something that we can now continue to expect?
Actually, I have explained this in the earlier question. There are a few items which have come in this quarter. One is the certain year-end provisioning of the expenses. One is the -- second is the CSR obligation discharge. And third is our -- because of the Red Sea crisis, our logistic cost has gone up. So these are the few major reasons because of increase in operating expenses. And apart from this, because we have done the capitalization of this LiPF businesses. Now the operating expenses, which was otherwise would have charged to the capital is now coming to the P&L. So these are the 4 essential reasons because of this has gone up.
No. So I thought you had already explained operational expenses. My question was more towards other expenses. But yes, I get the point.
Yes, this is same for the other expense.
The next question is from the line of Meet Vora from Emkay Global.
So first question was if you can guide CapEx and asset turn. Your values for FY '25, '26, '27 for the battery chemicals business, that would be helpful?
Last time when we had a call on battery chemicals, we had stated that we would be investing close to INR 6,000 crores in the next 4 to 5 years. And this is with asset turnover of 2. That is what we had indicated. So again, that there is some time to be given for the capacity to be utilized. So whatever we are investing now, we'll probably see the impact of that coming after 1 year, 1.5 years after the investment and then slowly, it will start adding up or building up. So this is I think that if you are asking for what the -- eventually those CapEx will result into asset turnover, it's approximately 2 for battery chemicals. That's what we had guided. Does this answer your question, Meet, please?
Actually, it was more like how can I model the yearly numbers? Because obviously, we know that there will be some revenue which will come in H2 FY '25 as per our guidance. So directionally, maybe we would do INR 800 crores of CapEx in FY '25 that would give us the revenues in '27. So I was more asking from FY '26 or '27 point of view?
See, we have invested already. I'm sorry if the presentation may not have stated it clearly, but we have already invested INR 800 crores in battery chemicals till now, which is up to FY '24. So FY '25, we have indicated INR 800 crores, which is now we are showing the investment on battery chemicals separately in our presentation. But that doesn't mean that we have that is the total investment. The total we have already invested INR 800 crores, which is going to give us revenue, which is in the second half of this year, and then it will continue to build up in FY '26. So if what you're asking is that impact of CapEx on revenue and EV. The first part of the INR 800 crores, which we have invested, which is going to result partially in this year and partially in FY '26. And the INR 800 crores, which is going to be invested now will again after a few quarters will get impacted in FY '27. So it's slowly -- it builds up over a period of time. So that's -- I would -- so this is how this will unfold, again, with certain assumptions, you can build up your model, Meet.
Sure. Sir, secondly, on -- when we say that our FY '25 guidance will be more or less within that FY '23 EBITDA range of say INR 1,800 crores, INR 1,900 crores. That means directionally, every quarter, we'll have to do roughly INR 450 crores of EBITDA. In Q4, we have done around INR 230 crores of EBITDA. That means we are expecting at least doubling of our EBITDA in Q1 or we are seeing higher growth in the second half. And directionally, if you can give some quarterly, how are you seeing that ramp up in that INR 1,800 crores or INR 1,900 crores of number for FY '25?
See, it will not jump. It will not be a situation where it will jump from INR 236 crores to INR 450 crores and then remain INR 450 crores for rest of the 4 quarters. So it will build up from INR 236 crores where we are and then slowly keep on increasing until the quarter 4 of FY '25.
Okay. Understood, sir. That means, I mean, we would either see very good growth in H2, maybe Q3 and Q4 will be very high in terms of quarterly run rate.
Indeed.
The next question is from the line of Alok B, who is an Individual Investor.
Sir, I had 3 basic questions. The first one is that in your presentation, the VCM to VDC integration. When do you expect that to be completed?
Yes. Alok, I think the VDC -- VCM to VDC. That project has been deferred slightly because that was primarily more to do our backward integration. At this point of time, the VDC and R-142B prices are still low. So we have a plan. We expect to have this project implemented in due course, perhaps in next -- middle of next year or probably end of next year, something like that. We have all the elements in place. We have, in fact, initiated the work but because of the lowering of the prices, we have staggered it readily. But that can be quickly executed as and when the market picks up.
Okay. Okay. So then secondly is even we the adjust the monomer, I believe it can be made in TFE. But I think in your presentation, you are procuring that externally. So is there any reason for that?
The quantity that we are procuring is quite small. See, our philosophy, Alok, has been to go for backward integration whenever it reaches a certain quantity or certain size we normally go for backward integration. And that will continue that our -- this approach will continue. Right now, at least it's not qualifying into the criteria that we have. But as soon as we see a jump in volume, we'll certainly do that, what you're saying.
Okay. Sir, and lastly, coming to the EBITDA margins. I think a lot of people have asked a question on this. What's our FY '25, do you think on a conservative basis, 25% to 27% is where you could actually end up rather than the 30% in FY '23?
I'm sorry, I didn't get your question. What...
So I think you guided that FY '25 would be comparable or slightly lower than FY '23. I think the margins you have delivered in FY '23, the EBITDA margin is about 30%. So again, if I am just doing the rough math, 30% seems a bit tough considering that you will see quarter-on-quarter improvement. So do you think the 25%, 26% is what you would be internally targeting or what we could assume?
No, no, we are targeting what we have stated, look, absolutely. And we have planned for that and certainly because that's -- and the multiple routes to achieve that, and we are doing that.
Okay. Sir, and just one last question. Coming to the PVDF battery binder grade. There seems to be 2 technology suspension and emulsion. Any comment on where what we are working on or what we're getting qualified?
We are in emulsion, and we have stated that and that's where there are many applications in which this is accepted. And this is undergoing approvals and testing by customer as I stated. So we are only in emulsion grade PVDF.
The next question is from the line of Kunal Tokas from Fair Value Capital.
Just 2 quick questions. First, how has been the realization trend in PTFE and the new polymers?
As I stated in our presentation, I think the realization has been stable, except for a very low-end fluoropolymer and the granular where we were under pressure because of the...
Because of the dumping.
Worth point, correct. Because of dumping. Other than that, at a higher-end polymers, it is more or less stable.
And the outlook is stable as well?
We are, yes, yes. Whatever we have seen in the last few quarters, we expect it to continue.
Okay. And the second question is related to fluorochemicals. How do you see the current demand in pricing scenario for refrigerant gases and an improvement that you foresee in the second half of this year?
Unfortunately, we don't see much improvement because at least in the segment that we are in, because some of wherever in export market to some extent, except non-U.S. market. It's stable, but because of the duty cuts in U.S. on refrigerants, and sort of -- I mean cutting down of quotas, we do not see these prices going back or recovering for refrigerants for us.
The next question is from the line of Deepak, who is an Individual Investor.
Sir, I have a couple of questions. How much the EV chemical business will contribute in your basket in FY '25 and '26? Also how much margins you are expecting for the same in particular EV chemical and your revenue number as a whole?
See, we had -- we have already given a guidance, Deepak, that our margin expectation and the target is 25% in the EV business. And this -- as in one of the previous questions, we had said that as we are adding CapEx. See the market is slowly building up, okay? And it's growing. And our approach has been primarily to cater to geographical areas where there is an advantage from us being a supplier from India. And one of the USP that we are offering is that our supply chain is quite independent and we are a IRA-qualified supplier. So with that kind of proposition, as the market is building up, we'll start seeing a buildup in our businesses. And actually, this business will -- is expected to have a very high growth in '27 and onwards, okay? And so this is what our plan has been. So our investments are also tuned as per the market growth expectations. Does it answer your question, Deepak?
Yes, sir, one more question. Sir, where do you see as a EV chemical sector in the next 2 or 3 years, if you compare the Chinese market contribution to the globe?
I'm sorry, I couldn't. Your voice is -- can you speak up, can you repeat the question please, Deepak?
Sir, where we see as a EV chemical sector in the next 2 to 3 years, if we compare the Chinese market contribution to the globe?
See, let me see if I understand your question. You're asking is that where do we see the EV sector in view of the Chinese?
Yes. Yes. EV chemical sector, yes, yes.
Okay. So in China, the EV has excess capacity, everybody now that, all the battery chemicals, et cetera, has excess capacities. However, if you look at the capacities outside China, it is still not there. It's at very, very early stage. And so Chinese and because of the new geopolitical situation, it's -- there is alternate is being looked at, okay? That's where all the supply is going to come from. And if you look at elsewhere globally, their batteries capacities are slowly coming up, whether it's in Europe or North America. So supply chain is being established to cater to this large jump in the EV demand that is expected to pick up from '27 onwards. So we are part of that -- we want to be part of that global supply chain and which is outside China.
The next question is from the line of Sanjesh Jain from ICICI Securities.
I got a couple of them. First, on the R-125 now that the pricing doesn't look so lucrative and we are seeing fluoropolymer taking off. Does it make sense for us to shutdown R-125 and put all the TFE to make the fluoropolymers? Is that option available with us?
Yes, Sanjay, that option is available with us, but we still have still the contribution margins in R-125 and as long as it's good. We have TFE capacities available.
Okay. So we are not sort of TFE capacity?
No. And whenever a situation like this come up, we do optimize with respect to the product mix, which maximizes our overall margins and contributions.
Got it. And second, on the more clarity on the CapEx for the Gujarat Fluoro business, the non-EV business. We are anticipating of INR 500 crores of CapEx, where are you planning to spend this?
This is Sanjesh, we indicated that, that part of the -- part of it is the tail end of our new fluoropolymer expansion, which we had deferred, if you remember.
Okay. Part of it is going to come for it. And part of it is going to be in the backward integration and some of the cost effectiveness programs that we are pushing now to ensure higher contribution margin fluoropolymers.
Fair enough, fair enough. One last quick question on the bulk chemical. We have at least the Bloomberg suggest that there is a good jump in the caustic price. Are we seeing that on the ground and build up effects will be visible from Q1?
We are not seeing that on the ground fortunately. We are looking forward to it. We are waiting because it's been a very long cycle of low prices in caustic. So we are still waiting for that to happen. But right now, the caustic prices are still quite subdued.
Okay. But it hasn't improved sequentially a bit because we are here...
If I look at my quarter 3 versus quarter 4, it's almost at the same level. There was a little bit improvement, but again, at the same level, I would say.
Sir, in quarter 1 because I think this price increases have happened in the month of April? So are we...
For a very short time.
Okay. It didn't sustain is what we are telling?
Yes. I think there was a slight blip, but I think it's again subsided, but we are expecting this caustic soda prices to pick up. But it's not yet appeared in a sustained way yet, Sanjesh.
The next question is from the line of Yash Shah from Investec.
Sir, I just had 1 clarification question. If you can please share the volume degrowth which you've had in the fluoropolymer segment for the whole year of FY '24? I just wanted a clarification on that.
You mean, Yash, volume, you're looking for volume numbers.
No, as compared to FY '23, in the fluoropolymer segment, what kind of degrowth what we've witnessed -- just in the fluoropolymer segment?
Yes, there was a degrowth. And we mentioned that earlier that the degrowth primarily was driven by slowdown. Two reasons. One, of course, the price is on a very, very low end grades, particularly in the granular. And the second was because the destocking phenomena which happened in global markets. Because of that, the customer has stopped buying it because in '22 and '23, there was a lot of stock was built up in order to ensure the sustainability of the supply. And that part sort of resulted in destocking in FY '24. So that's because that has impacted our volumes to some extent.
Okay. Understood, sir. Will you be able to share the numbers, sir, of the growth [indiscernible]?
Normally, we don't share numbers, particularly for the sales, Yash. But you can you can take it up off-line with Vibhu to understand this in more detail if you would like to.
The next question is from the line of Dhavan Shah from Sekurit Advisor.
My question is on we are running at roughly INR 1,000 crores annual run rate of the EBITDA, and we are expecting roughly INR 200 crore in FY '25. And given that the basic chemical and the fluorochemical more or less it will remain at the same level as you guided in the opening remarks. So this largely INR 1,000 crore incremental EBITDA we're expecting that this will come from fluoropolymers only?
Yes. Dhavan, that's what we indicated because we said for 2 reasons. Of course, 1 is to get back our normal level of sales. And the second is because we added capacities in several new polymers. And those were going through qualification process. So this new fluoropolymers, we are expected to see is providing impetus to the volume growth. So this is indeed correct what you said.
So what kind of margins are we operating in the fluoropolymers? Is it 25%, 30%? So logically, I think this INR 3,000 crores to INR 4,000 crores incremental revenues you are looking at in FY '25 from this incremental capacity of fluoropolymers?
Yes. In fact, margin expectation, we have already -- we have not ever given the segmental margin, but we have said that on an overall basis, it's around a 30% -- 25% to 30%.
And in terms of the revenue, let's say, if you want to have INR 1,000 crore incremental EBITDA, you should do at least INR 3,000 crores incremental revenues. This INR 300 crore increment -- this INR 3,000 crore incremental revenues would come from these fluoropolymers in terms of the different PTFE, PFA, or PVDF, what kind of numbers are you expecting?
A lot of it will come mostly from new fluoropolymers as you said, which is the collection of what you stated. So I think it's a product mix Dhavan, which is difficult for me to give you in this short call. However, it will probably be driven -- not probably, it will be driven by the new fluoropolymer segments.
So demand-wise, any outlook, I mean, in terms of any order book or anything can you highlight in the other fluoropolymers which -- for which we have already expanded the capacity, how is the order book right now versus the last year? What is the visibility from the customer side? And any ballpark number or any...
See, we have added capacities in fluoropolymers like FKM, PFA, PVDF are the 3 and also micro orders. So we had stated this much earlier capacity, then it's primarily driven by these 4 segments where the market demand is. And we are present and we're slowly capturing the market share in this. So what I can suggest again, Dhavan, is a due to lack of time, perhaps you can connect with us offline.
Thank you. Ladies and gentlemen, we will take that as a last question. I now hand the conference over to the management for closing remarks.
So thank you very much, and I really appreciate and thank each one of you for showing interest in GFL, and we look forward to a growth journey. And we expect to see the results going up quarter-on-quarter and achieve the target that we already stated. So I would like to thank you all for interest shown in GFL. And in case of any questions, I request you to please connect with Mr. Vibhu Agarwal, who looks after Investor Relations. So thank you very much, and have a good day. Bye.
On behalf of Batlivala and Karani Securities India Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.