ICICI Securities
Target: ₹5,380
CMP: ₹4,551.5
We upgrade to a Buy (from Add) with a revised target price of ₹5,380 (up from ₹5,050), valuing the stock at 35x FY29E EPS.
We like GFL’s strategic positioning, as the company enjoys a distinct first-mover advantage with the largest battery chemicals portfolio in India.
GFL is capable of addressing 70 per cent of the total value (cost) requirement for LFP batteries, establishing the company as a critical player in the evolving non-Chinese global supply chain.
GFL benefits immensely from its in-house access to critical HF, alongside its proven expertise in processing fluorine chemistry and managing high-temperature calcination.
Having already established pilot-scale capacities, the company has spent the past four years navigating a steep learning curve.
To factor in execution variables, we have compressed our target PE multiple to 35x (down from 40x) while integrating GFCL EV’s financial estimates into our consolidated projections.
Our EPS estimates for FY27 and FY28 have been cut by 4-8 per cent on account of losses in GFCL EV in FY27E, and lower revenue for bulk chemicals. Our reversed valuation analysis indicates that GFL trades at 22x FY29E core EBITDA (excluding GFCL EV).
This implies that the CMP discounts the core chemical business efficiently but captures virtually nil optionality or value for the high-growth GFCL EV subsidiary, offering investors a highly favourable risk-reward entry point.