The Inox GFL Group with a legacy of more than 90 years is one of the largest business Group’s in India. The group is a forerunner in diversified business segments comprising specialty chemicals, fluoropolymers, gases, wind turbines and renewables. The group currently with 3 listed entities has a market capitalization ~ 5 bn USD.
30 years of focused expertise in Fluorine Chemistry only Fluoropolymer producer in India and amongst the top few globally.
Major supplier of Fluoropolymers to Europe and USA Foray into New Age Business – Chemicals & Fluoropolymers for EV- Batteries, Solar Panels & Hydrogen Fuel Cells.
Established player in Fluoropolymers, Specialty Chemicals, Refrigerants & Bulk Chemicals three manufacturing facilities in India, Fluorspar mine in Morocco, offices and warehouses in Europe and USA.
Company is optimistic about the rising opportunity in fluoropolymers and battery chemicals over next 5-10 years. It plans to expand capacity by 7x in FKM, 4x in PVDF, and 4x in PFA over the next two years, which will significantly drive revenue growth in new fluoropolymers.
These are high-value products on which realisations currently are at US$25-40/kg, and EBITDA margins are higher than the company average. Post FY25, GFL expects significant opportunities from battery chemicals for which it is planning to commercialise the first plant in next two quarters. GFL is well placed to increase its revenues on the back of its significant exposure to new-age industries of battery, solar and green hydrogen. It aspires to double the revenue in next three years and maintain EBITDA margin at 30-35% at least.
In FY22, PTFE revenue grew 60.9% YoY to ₹13.3 bn, which was helped by higher volumes and better realisations. Volume offtake was aided by significant background work done by the company in prior few years in terms of value added grade development and customer audits. It started with 2-3 grades a decade ago and has now scaled to over 50 grades. 85% of the PTFE sold by GFL is in the value-added grades where Chinese presence is limited.
Europe and US are key markets for GFL (it has strong sales teams, warehousing services, and large basket of product approvals in the two regions). We believe the company was making painstaking efforts over the past decade, which helped scale up the business. This ensures that competition too must undergo a similar exercise in case they enter the category. GFL stated its exports to developed markets is higher than China’s total PTFE exports to these markets.
FKM –Well planned capacity expansion planned led by spurt in demand.
FKM has large use in ICE automobiles, and western peers have avoided adding new capacities in past few years. However, FKM demand has surged due to
- Slower than expected EV penetration
- Stricter emission norms, which has increased use of FKM in ICE vehicles
- Rising mix of ethanol in transport fuel. FKM production was also impacted by limited availability of key intermediate, R-142B / VDF. It is the same intermediate that also goes into making PVDF, demand for which has surged due to its usage in batteries and has better realisation vs FKM. GFL has secured approval for large FKM grades and is considered a reliable supplier due to backward integration for R-142B. Company is in process to expand its FKM capacity from one reactor in FY22 to seven by FY23-end. This should take FKM total capacity to 7ktpa, and the company has said the entire capacity is prebooked. Current realisation is strong at ~US$30/kg.
PVDF – Augmented capacity expansion targeted at battery grade
GFL has one reactor (1.2kpta), which caters to demand from the coating and moulding industry. Demand for PVDF has surged due to its use for binding purposes in lithium-ion batteries.
One GWh of battery production need 50te of PVDF for bidder. GFL has developed battery-grade PVDF and believes (from internal assignments) that its product quality is equivalent to global peer.
Company expects to commission four reactors by FY23, which will take its total PVDF capacity to 4.8ktpa. However, PVDF prices may normalise, but the company would benefit from rise in its share of higher-value battery-grade PVDF. GFL expects PVDF to emerge as the largest fluoropolymer category crossing global demand for PTFE.
GFL anticipates significant PVDF capacity expansion to happen post-FY25 onwards as battery capacities ramp-up in India, Europe and US. It enjoys advantage from availability of the intermediate product (becoming a reliable supplier with negligible exposure to China) while its backward integration makes it cost-competitive as well.
GFL has already restarted its R-125 plant (via TFE route) with a total capacity of 6ktpa. It believes R-125 demand may start tapering in next 4-5 years as it has very high GWP. It has also announced 10ktpa capacity in R-32, which has low GWP, and expects the product to be in use for a very long period (probably till CY40). Company is confident of starting the plant before Dec’23 post which new capacity addition for emissive use will be freezed globally. R-32 will also allow GFL to produce R-410a (made by equal mixture of R-125 and R-32), which is the most popular HFC for RACs today.
Company plans to expand its AHF capacity from 120tpd to 220tpd, which will help supply key starting raw materials for fluoropolymer, ref-gas and battery chemicals. It has TFE capacity of 36ktpa post debottlenecking in TFE-3, which will take care of the requirements for PTFE, PFA, R-125 and other products. It still sees more opportunity to expand its TFE capacity by debottlenecking in the future in case of requirement.
Company’s focus will remain on business expansion only in fluoropolymers and battery chemicals in the medium term, and it does not expect any incremental investment in the fluorospecialty business (intermediate for agro/pharma products).
Shuchi Nahar is a Certified Research Analyst. She can be found on Twitter at @shuchi_nahar
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