Tanfac Industries Ltd Q1 FY27 Earnings Analysis

- FY28 revenue expected between INR 1,600 to INR 2,000 crores with new HF plant operational. - Ambition to reach INR 3,000 to INR 3,500 crores in the next five years. - R-32 project (20,000 MT capacity) expected to generate INR 900 to INR 1,000 crores annually. - Additional capex of INR 500 to 700 crores planned post-R-32 project, focusing on high-performance fluoropolymers, sustainable refrigerant gases, electronic chemicals, and battery chemicals. - Solar grade DHF market expected to grow from 24-25 KT to approximately 150 KT in five years (6.5-7x increase). - Long-term customer contracts secured aggregating approximately INR 3,612 crores over 5-7 years. - Current solar grade DHF capacity (20,000 MT) is about 85% booked for the next 3-3.5 years. - Company's focus on operational excellence and backward integration to sustain growth.

- TANFAC expects operating EBITDA margins to remain range-bound around 15% to 18% from existing business. (Page 7) - Despite normalization in margins during FY26, the company maintained healthy profitability and expects margins to stabilize. (Page 7) - Q4/FY26 margins anticipated to improve by 3% to 4% with ramp-up in R-32 revenues. (Page 13) - Payback period for the proposed HFC project is expected to be less than 4 years due to strong demand and realizations. (Page 15) - Revenue growth driven by long-term contracts (~INR3,600+ crores), new capacities (20,000 MT solar grade DHF, R-32 plant), and future capex plans. (Pages 5, 13, 17) - The company plans incremental capex of INR500-700 crores in next 3-5 years to expand high-margin products, supporting further profit growth. (Page 17) - PAT was 10% of revenue in FY26, down from 16% in FY25, but expected to improve with operational ramp-up and new product mix. (Page 7)

- INR 495 crores capex announced, includes: - INR 405 crores for setting up 20,000 metric tons per annum HFC-32 manufacturing facility at Cuddalore, on track for commissioning by Q3 FY27. - INR 90 crores towards other value-added fluorinated products. - Additional INR 30,000 tons AHF capacity planned; announcement expected in next 2–3 months (not included in INR 495 crores). - Long-term expansion plans include investments in: - New HF and solar grade DHF facilities. - Electronic grade DHF for semiconductor applications. - Future sustainable refrigerant gases like HFOs. - High-performance fluoropolymers and fluorochemicals. - Battery and electronic chemicals. - Plan to invest another INR 500–700 crores over next 3–5 years, post current R-32 project. - Future funding through mix of promoters’ preferential allotment, QIP, and term debt.

- For the INR405 crores R-32 project, TANFAC plans to raise around INR400 crores. - Out of this, INR100 crores will come from promoters via preferential allotment (equity). - The remaining INR300 crores will be raised through a mix of Qualified Institutional Placement (QIP) and term debt. - For future capex beyond FY27, including new product lines like high-performance fluoropolymers and fluorochemicals, funding sources will depend on internal accruals, debt capacity, or potentially another fundraise. - No definitive decisions on additional debt or equity fundraises beyond the current plan have been made yet.

- TANFAC Industries Limited has secured long-term supplier contracts aggregating approximately INR 3,612 crores over 5 to 7 years as of FY26. - An additional indefinite duration agreement with Blue Star is in place. - For solar grade DHF, orders of around INR 1,050 crores have been won, which book approximately 85% of the current 20,000 MT per annum capacity annually through FY29. - For R-32 refrigerant gas, about 65% of the 20,000 MT capacity is already booked with customers; efforts are on to secure another 15-20%. - The company targets INR 1,600 to INR 2,000 crores revenue by FY28, with an operational new HF plant, aiming for INR 3,000 to INR 3,500 crores in 5 years based on a robust product pipeline. - Long-term contracts provide strong demand visibility for upcoming capacities even before commissioning.