Gujarat Fluoro is this week's top stock; why analysts are bullish
The chemicals company missed estimates on all fronts in the June quarter. This was due to the logistics challenges amid the Red Sea crisis and pricing pressures due to continued dumping by China. Revenue, EBITDA, and PAT fell short of Reuters-Refinitiv estimates by 4.7%, 8.1% and 18.8%, respectively. While the fluorochemicals segment reported a weak quarter, the new fluoropolymers gained traction, led by innovations in emission controls.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
The management is confident about performance improvement, supported by buoyant growth prospects of the EV segment, and volume improvement in fluoropolymers. Analysts, too, are optimistic about the company’s long-term business outlook.
The firm has a presence in 16 countries and has diversified operations, from refrigerant gases to chemicals and fluorospecialities. It is expected to benefit from the buoyant prospects of fluoropolymers and fluorochemicals. The former have properties that make them suitable for use across multiple industries like automotive, transportation and electronics. There is strong demand from 5G, EV batteries, solar panels, hydrogen fuel cells and semiconductors. The rising environmental awareness and government incentives are further fuelling the growth of fluoropolymers. The company’s 2023-24 annual report states that the global fluoropolymers market is expected to grow at 5.9% CAGR between 2022 and 2030, to $325 million.
On the other hand, extensive use across petrochemical, agrochemical, construction, personal care and pharmaceutical sectors is boosting the growth of fluorochemicals due to their resistance to abrasion, chemicals and fire. The report cites the estimates of the Imarc group that projects the global fluorochemicals market to grow at 4.3% between 2024 and 2032, to $35.7 billion. Strong entry barriers in both fluorochemicals and fluoropolymers due to requirements like technical know-how, process safety and raw-material availability provide an added advantage to the company. Looking at bulk chemicals, industries like textiles, soaps and detergents, pharma, agri-chemicals and plastics are the key demand drivers. The popularity of EVs is also fuelling the demand for battery chemicals.
The company is taking steps to sustain its growth momentum. Vertically integrated facility to maximise value addition, commissioning of solar-grade PVDF films in the June quarter, focus on developing value-added product portfolio in fluorochemicals, optimising product portfolio in fluoropolymers and likely commissioning of the LFP plant (for EV batteries) in the third quarter of the current fiscal year are some of the initiatives. The company has collaborated with educational and research institutes to develop customised solutions and ensure compliance with the highest quality standards.
Selection methodology: We pick the stock that has shown the maximum increase in ‘consensus analyst rating’ during the past three months. The consensus rating is arrived at by averaging all analyst recommendations after attributing weights to each of them (1 for strong buy, 2 for buy, 3 for hold, 4 for sell, 5 for strong sell). An improvement in consensus analyst rating indicates that the analysts are getting bullish on the stock. Only stocks with more than five analysts covering them are considered. You can see similar consensus analyst rating changes during the past week in ETW 50 table.
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This story originally appeared on: India Times - Author:Faqs of Insurances
