Stallion India Fluorochemicals Limited
About the company:
- Stallion works in the fluorochemicals space, dealing with refrigerant gases, specialty gases, semiconductor gases, next-gen refrigerants (HFOs), and even liquid helium.
- Their gases find applications in a wide range of industries, including automotive, pharmaceuticals, fire safety, defence, power, solar, and semiconductors.
- So far, their focus has mainly been on formulation, blending, debulking, and distribution. Now, they’re moving into backward integration, manufacturing R-32, to cut down on imports and boost margins.
Customers:
- OEMs: BlueStar, Voltas, Daikin, LG, Amber, etc. (approved vendor).
- Aftermarket Service Providers & Distributors: which together form 80% of refrigerant sales.
- Industrial Users of Speciality Gases: across auto, pharma, defence, fire safety, power, semiconductor, solar, and fibre optics industries.
Details of expansion plans:
1. Rajasthan (Bhilwara) R-32 Plant
- Products:
- R-32 (refrigerant gas): base molecule.
- Will also support HFO blends (R-410A, 404A, 454B, 513A, etc.) since all need 50-60% R-32.
- Capacity:
- Stage 1: 5,000 tons.
- Stage 2: Another 5,000 tons (total 10,000 tons).
- Start Date:
- Land already acquired; construction in progress.
- Commercial production expected mid-2026.
2. Andhra Pradesh (Mambattu) - HFO & Specialty Gas Facility
- Products:
- HFO refrigerants & blends (next-gen, low GWP, e.g., 454B, 513A).
- Semiconductor gases (helium, argon, other high-purity gases).
- Hydrocarbon handling facility also included.
- Capacity:
- Originally a 5-tank facility, scaled up to a 10-tank facility.
- Also includes a semiconductor gas facility similar to Khalapur.
- Start Date:
- Construction ongoing in 2025.
- Expected completion by Oct 2025; operations in late 2025/early 2026.
- Benefits:
- Close to Southern OEM hub (Voltas, BlueStar, Daikin, etc. nearby).
- First mover in HFO blending before industry shifts in 2026-27 due to global quotas.
3. Maharashtra (Khalapur) - Semiconductor & Specialty Gases
- Products:
- Semiconductor gases, liquid helium, high-purity specialty gases.
- Designed to handle 300-bar cylinders (latest global standard, vs. 200-bar earlier).
- Capacity:
- Full blending + debulking facility for semiconductor gases.
- Start Date:
- Civil work completed, machinery ordered.
- Expected commissioning by late 2025.
- Benefits:
- Semiconductor ecosystem in India & globally is expected to grow at a strong double-digit CAGR.
- Higher entry barrier (takes 2-3 years for customer approval once product is qualified); sticky revenue
Management:
Shazad Sheriar RustomJi started this business as a first-generation entrepreneur when he was 22 years old. He has been running and growing it successfully for the past 32 years.
Market Information:
- In developed products, the aftermarket is 80-85% and OEMs are 15%.
- In new products like HFO, OEM requirement is almost 80% or 90% and the aftermarket is 10%.
- As per management, India has a production capacity of 30,000 tons per year in R-32. 15K tons are used internally, and the rest is exported.
Risks:
- Negative cash flows in the last three years
- The company has never done molecule manufacturing, needs to be seen if they can execute.
- A lot of company money is tied up in inventory and receivables, and with such aggressive plans, it might face a cash crunch.
- Management gave a below response when asked about negative cash flow
Investment Thesis:
- Increase in PAT margins to 17-18% because of backwards-integrated manufacturing.
- The company has an ambitious target of 2500 cr topline by 2030.
- Even if the company achieves 2000 cr topline at 15% Net Profit Margin, with a modest PE of 20, it will have 6000 cr MCAP. Roughly 6x from here. A 43% CAGR return in 5 years.
Thanks to @satishwe for sharing this company idea.
Current MCAP: 1154 cr
Disclosure: Invested with a small allocation