GFCL (Gujarat Fluorochemicals Limited) is investing significantly in fluoropolymers and expects substantial contributions from this segment starting from FY25. The company plans to invest around ₹1,000 - ₹1,500 crore annually in FY22-24.
SRF is set to operationalize its first line of fluoropolymers in the second half of FY24. The company also aims to add new dedicated lines for advanced intermediaries in the agrochemical and pharmaceutical sectors, along with new-age products.
Navin Fluorine International expects increased productivity from its existing plants and plans to expand further. They anticipate higher demand for their products, including refrigerant gases.
Deepak Nitrite intends to invest ₹2,500 crore over the next three years, focusing on improving its phenols business and downstream applications through backward integration.
Tata Chemicals plans a ₹2,000 crore capex for the next three years to enhance capacities in soda ash, sodium bicarbonate, and silica. They aim to capitalize on the growth potential of solar energy, electric vehicles, and fuel cells.
The valuation range of the specialty chemicals sector varies widely, from 23 to 46 times FY24 earnings, excluding Tata Chemicals. The sector trades at higher multiples due to ongoing capex plans.
Speciality Chemical business delivered growth in Margins and Sales YOY inspite of Agrochemical destocking. Significant inventory winding off taking place globally. There is rescheduling of some orders. Temporary Hiccups being seen.
Ref gases were impacted due to Chinese dumping, Soft Indian summers, demand for Chloromethanes were also weak, underlying potential remains strong for REF gases. Expecting performance to improve in H2.
1100 crore worth of projects will commercialise in Fluoro Chemicals. Including PTFE.
Packaging Films facing headwinds due to huge capacity additions. Will take sometime for Demand and Supply situation to normalise. BOPET is especially worse.
1100 Crore for Fluorochemicals+1400-1500 crore of Projects in Speciality chemicals. 2800-2900 crore of Capitalisation in FY24+ 400-450 Crores in Aluminium Foil will get commercialised.
Speciality chemical business has grown 10% YOY. Majority of decrease in Chemical business is due to reduction in HFCs. Speciality chemical business EBIT Margins have increased.
We are still positive on overall basis for spechem business this year.
1000-1500 MT of sales should come through in PTFE.
6-7 AI’s will take 2 years to materialise. In fairly good shape to get these contracts.
H2 should be much better than H1 in Ref gases. Sales will be better in Q3 & Q4. From Reg gas, from a year as a whole there will be some growth vs last year.
Will be better to wait for Q2 to give a better picture for FY24. We Believe growth is possible due to contracted nature of the business.
Willingness to keep a larger inventory has gone down due to China re-opening up.
HFC R32: some new capacities will play out, our position is fairly strong due to backward integration and portfolio of products. Overall bullish on the long term prospects of R32.
PTFE prices in the shorter term should go up. Improves economics of the project.
Dedicated plants today will be 15-16, revenue will be in the range of 85%. Revenue shift towards dedicated should be higher. Most plants we will commercialise today(H2FY24) will be dedicated in nature.
Q2 will be better than Q1 in ref gases and H2 will be better than H1.
Majority of the inventory rationalisation has happened in the Agrochemicals space. Pricing with the customer is driven on contracts business. Product based contracts and Not on EBITDA Per tonne.
Market share in key intermediates should be 40-45%. Avg ROCE in Packaging Films business is in excess of 16-18%. Happy with 15-17% in Packaging film business.
Destocking is happening at the end distributor level.
Closing Q4 Margins were on the higher side. Will give more idea in Q2. When asked on bettering margins in FY24 over FY23.
Disclaimer: no transactions in last 30 days. Not a recommendation to buy or sell.
Can someone help me understand why PFOA alternative will not be harmful to human(and other living beings) if they are used in general applications involving humans?
My point of view based on limited knowledge -
Process can be PFOA free but they might be using other PFAS whose long term impact on the health is not known and hence companies are using those.
But considering that the F based compound can be a lot stable(especially fluoropolymers use case) then why can not be other PFOA alternative be stable enough to reach human bodies.
Another potential concern is that other PFAS are now in use. For example, hexafluoropropylene oxide (HFPO, also known as a ‘GenX’ chemical) is often used to replace PFOA in manufacturing processes, while perfluorobutane sulfonic acid (PFBS) is used as a replacement for PFOS. New PFAS also continue to be developed. These chemicals haven’t been around long enough for researchers to fully understand if they might have the same (or even different) health effects.
According to me, increasing use of fluorine in the pharma and agrochemicals might not bring any harmful impacts to human beings(and hence regulation) as we are not relying of its properties of building stable compound when they are used in pharma and agrochemicals.
It gets used in pharma due to other reasons like Lipophilicity and hence we are not optimising for building stable compounds(or forever chemicals).
Though its use in fluropolymers might bring regulations(due to its properties of forming stable compounds) as it may somehow harm human beings if they are used in general applications involving human beings as non stick cookware.
There are other PFAS that are harmful to human beings(got it from chatgpt), have they mentioned about these somewhere?
PFOS (Perfluorooctanesulfonic Acid): Historically used in Scotchgard and firefighting foams. Like PFOA, PFOS has been linked to several adverse health outcomes, including developmental effects to the fetus during pregnancy, cancer, liver effects, immune effects, and thyroid hormone disruption.
PFHxS (Perfluorohexanesulfonic Acid): Used in firefighting foam and various consumer goods. It is also persistent in the environment and the human body and has potential health effects.
PFNA (Perfluorononanoic Acid): Used in the production of fluoropolymers and has potential health risks similar to other PFAS compounds.
PFHpA (Perfluoroheptanoic Acid): Lesser-known and studied than PFOA and PFOS, but still present concerns regarding its persistence and potential health effects.
PFBS (Perfluorobutanesulfonic Acid): A replacement for PFOS in some applications. It has a shorter chain length and is believed to be less bioaccumulative than PFOS. However, the potential health impacts of PFBS are still being studied.
In a recent concall, SRF announced a 275 cr investment in Capacitor grade BOPP film
Can anybody explain what is capacitor-grade BOPP film and where it is used?
Nope, that was a reply given to difference between BOPP films and Capacitor grade. I attended the call live and could understand the context while listening
Destocking and inventory rationalisation taking place at customer end
Rescheduling of order but no orders were cancelled therefore Q3 will be better than Q2 and Q4 will be better than Q3 , H2 will be better than H1
Single Digit growth guidance for whole year in SCB
06 new products launched in H1
Complex AI pipeline on track
235 crore Capex for agro intermediate which can become AI in future
MPP4 and PIP full potential will be seen from Q3 and in FY25
06 new products ( 04 agro and 02pharma) commercial quantity sent to customers , they are small today and still not factored in numbers because of these
PIP : products sent to lab, some production started , realisation in FY25
FY25, FY26 - 20% growth possible
90% SCB is contracted ( 6month to 3 years)
Flourochemical Business:-
Volume were down and prices for ref gases were also down
Weak summer in domestic market affected volumes
US market Ref gases volume uptick didn’t come through as expected some because of china dumping
Order for large customer in CY24 and CY25 tied up ( volume and price tie up also )
R32 will be commissioning at end of Nov/Dec , delay because of govt. approval
Volume pressure will be there in H2 also , Q4 should be better
125 will be phased out first then 134a and then 32 in US and EU
Demand environment for some industrial chemicals also subdued
Highest ever volumes sold for MDC ( Chloro methane derivative )
Dymel now being sold in 27 countries
Uptick in prices for HFC seen in India and M.East , Industrial Chemical will also be performing better in new quarters
FY24 will see -ve growth
PFTE Plant :
Commissioned with own technology
6-9 months for product approval
new VAP and plant rampup will take less time than previously thought ( 2-4years)
in next 2 years it will be fully ramped up
Pvdf some delay because of land
** fcam and fep** - pretty much online
PFB :
supply increased → prices down
275 crore capex for capacitor grade film at Indore , IRR:15-16% , Payback period : 5-6years , At current prices margin > Current BOPP
Aluminium foil now in trial phase
Yes there are existing players in capacitor grade film but they are not doing well
Demand - 14-15000 TPA and current capacity -7000TPA therefore majority is still imported
contracted sales are 50-60 % , prices are formula linked
Coated Fabric segment - All time ever sales reported Laminated Fabric -
Record sales in H1
some oversupply seen because of new capacity addition
Debt increased from 3250 crore in Mar 22 to 3900crore in Mar 23 because of interest rate increase and some because of Capex
Capex
FY24 : 2900-3000 crore including 400-450 crore for land ( 80-85% in Chem. Business)
I feel, massive accumulation is happening from last 2 years. Definitely these volumes are not from retail. I guess, The net block of 10k crore will surely bring in operating leverage 1 year down the line and market feels, worst is over atleast for SRF
And, looks like bottom is in place with today’s move
I do not think so. Today most of the chemical company have 5% increase in share price. Infact some of the agrochemical showing worst results also increase by 5% today. Let wait more.
Q3 FY 24 Concall summary BUSINESS
● Gross operating revenues declined by 12% Y-o-Y to INR3,053 crores.
● Profit after tax came in at INR253 crores in Q3 FY24, down by about 50% Y-o-Y.
● Chemicals’ revenue (46%/70% of total sales/EBIT in 3QFY24) dropped 21% YoY to
INR1390cr while EBIT declined 43% YoY to INR320cr EBIT margin contracted 900bp YoY to
23.1%. The specialty chemicals business continued to face headwinds due to inventory
rationalization by certain key customers, while the Fluorochemicals business was hit by
seasonally low demand for refrigerants. However, it witnessed improved performance in the
later part of the quarter. Management is expecting a recovery in 4QFY24.
● Packaging Film’s revenue (36%/10% of total sales/EBIT in 3QFY24) declined 9% YoY to
INR1090 cr and EBIT was down 62% YoY to INR44.9 cr. Margin contracted 570bp YoY to
4.1%. This downturn was largely due to the oversupply in both BOPET and BOPP film
segments.
● Technical Textiles’ revenue (15% each of total sales/EBIT in 3QFY24) grew 8% YoY to
INR460cr EBIT margin expanded 700bp YoY to 15%. EBIT surged 2x YoY to INR68.8cr The
segment performed well owing to healthy domestic demand for (NTCF)Nylon Tyre Cord
Fabric coupled with strong demand for belting fabrics and polyester yarn.
● Introduced three new products in the agro vertical and successfully commissioned two large
dedicated agro facilities.
● Successfully commissioned the PTFE and the R32 plants in Q3.
● Aluminium Foil facility on January 1, 2024. This phase represents an investment of around
INR536 crores asset turn should be 1.7-2 times. Looking at getting accelerated approvals from
both local and global customers, 6 to 12 months for some of the global approvals to come
through.
● Roughly about 90%-91% was our capacity utilization in Packaging Film’s
● Interim dividend at a rate of 36%, equivalent to INR3.60 per share
● Operating leverage will play out in PTFE over the next 6 to 12 months, or maybe slightly
more than that.
● 35-40 products that we supply, total dedicated plants 17-18.
● Q1 is the strongest quarter. MANAGEMENT GUIDANCE
● Management plans to incur ~INR20-22b of capex in FY25.
● Management is expecting a recovery in 4QFY24.
● BOPET, I think it’s a story which will probably take another 12 months, maybe slightly more
than that, to kind of normalize. BOPP is doing better. There are no new supplies that we hear
around it, but the Chinese will always keep putting up new lines. There will be some pressure
on that as well.
This is to inform that KAMA Holdings Limited (“Company”) has sold 675000 of equity shares capital of SRF Limited (“SRF”) which is its subsidiary company. Consequently, the shareholding of the Company in SRF Ltd. has reduced to 50.2556%
