Gujarat Fluorochemicals (GFL) has experienced a financial setback in the second quarter of FY24, with a reported EBITDA of INR 1.6 billion and a 17.2% margin. The company's less than expected performance is due to gross margin compression and insufficient absorption of fixed cost.
Despite the disappointing Q2 results, ICICI Securities maintains confidence in GFL's future. The firm highlighted GFL's potential in the fluoropolymers sector and its strategy to serve 30-40% of cell producers with integrated battery solutions.
In light of the Q2 results, ICICI Securities has adjusted its earnings per share (EPS) estimates for FY24E and FY25E downwards by 31% and 13% respectively. This revision has led to a decrease in the target price from INR 3,570 to INR 3,225. Despite this adjustment, the firm continues to maintain a 'BUY' rating for GFL, indicating their belief in the company's long-term prospects.
InvestingPro Insights
In line with the article, InvestingPro data and tips offer some interesting insights about Gujarat Fluorochemicals (GFL). One of the InvestingPro Tips emphasizes that GFL yields a high return on invested capital, which aligns with ICICI Securities' confidence in the company's long-term prospects. Additionally, strong earnings should allow the company to continue its dividend payments, which is a positive sign for investors.
InvestingPro data also highlights that GFL is a prominent player in the Chemicals industry. However, it's worth noting that the company's revenue growth has been slowing down recently. This could be a factor to consider when adjusting earnings expectations and target prices.
Finally, despite trading near its 52-week low, analysts predict GFL will be profitable this year, having been profitable over the last twelve months. This reinforces the 'BUY' rating maintained by ICICI Securities.
For further insights and a total of 13 InvestingPro Tips on GFL, consider exploring the InvestingPro platform.
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