Fluorination chemistry gaining higher acceptance amid rising pharma/agrochem demand...

What's buzzing? 

The fluorination chemistry space is hotting up with significant investment from existing players and new players vying for the same. This is mainly on account of increasing demand for fluorine molecule in end-user industries like agrochemicals, pharmaceuticals, automobile, coatings, etc and new usage identified in areas like EV, hydrogen fuel cells, solar, 5G, etc. 

Context 

Recently, Anupam Rasayan announced a capex of Rs 670 crore for fluorochemicals catering to growing demand in the US, Europe and Japan. Last year, SRF announced an aspirational Rs 15,000 crore capex over the next five years of which Rs 12,500 crore will be allocated to specialty chemicals, in general, and fluorochemicals, in particular. Navin Fluorine has recently increased the capacity of hydrofluoric acid by 40,000 tonnes by investing Rs 450 crore towards backward integration. Fluorine, being a highly reactive molecule, requires high expertise to handle. Thus, only a handful of manufacturers are present in the fluorine market. 

Our Perspective 

Due to growing awareness and acceptance of benefits of fluorochemicals usage thanks to improved efficacy and potency, fluorine penetration in pharmaceutical products has improved from 25-30% to 40% in new products pipeline. In agrochemicals, it has improved from 30% to 50%. Highest used fluoropolymers like PTFE are increasingly being used in automobile, pipe sheets, coating, cooking pans, etc, due to proven superior heat resistant and insulation qualities. New discovery suggests that new fluoropolymers like PVDF, FKM can provide significant required qualities for products used in sectors like EV, hydrogen fuel cells, solar, 5G, etc. Also, US, Europe and Japan are aggressively looking at India as an alternative to China. Though China has an advantage in raw material availability, we have seen India fluorine players gaining good traction, particularly SRF that has witnessed 4x increase in fluorochemicals in the past four years while Navin Fluorine witnessed a 2x increase. We remain bullish on growth prospects of our coverage fluorine players SRF and Navin.