Stallion India Fluorochemicals Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

FINANCIAL YEAR 2025-26

1. World Economic Outlook

Global Growth Moderates Amid Rising Uncertainty

The global economy entered 2026 facing renewed economic and geopolitical headwinds. After demonstrating resilience during 2025, global growth is projected to moderate to 2.5% in 2026, down from 2.9% in 2025, making it the weakest pace of expansion since the COVID-19 pandemic. Elevated geopolitical tensions, disruptions to global energy markets, persistent inflationary pressures, and tighter financial conditions have collectively impacted economic momentum across advanced and emerging economies. Despite these challenges, economic activity is expected to strengthen gradually over the medium term, with global growth forecast to recover to 2.8% during both 2027 and 2028, supported by easing inflation, stabilizing commodity markets, and improving trade conditions.

Geopolitical Tensions Continue to Influence Global Markets

Geopolitical developments remained a defining factor shaping the global economy during the year. The conflict in the Middle East significantly disrupted energy supply routes and global commodity flows, leading to heightened uncertainty across financial and industrial markets. Supply chain disruptions and increased shipping costs affected international trade while placing upward pressure on production costs across multiple industries.

The evolving geopolitical landscape has encouraged businesses to diversify supply chains, strengthen regional manufacturing capabilities, and reduce dependence on concentrated sourcing hubs. These structural shifts are expected to reshape global manufacturing networks over the coming years while creating new investment opportunities across emerging economies.

Inflation and Monetary Policy Remain Key Focus Areas

Higher energy and commodity prices contributed to renewed inflationary pressures across both advanced and emerging economies during 2026. Although inflation had moderated significantly from post-pandemic peaks, the resurgence in energy costs prompted central banks to maintain a cautious monetary policy stance.

Higher interest rates and tighter financial conditions continued to increase borrowing costs for governments and businesses, while financial markets experienced elevated volatility. Policymakers across major economies remained focused on balancing inflation control with the need to support economic growth, financial stability, and employment generation.

Commodity Markets Drive Global Cost Dynamics

Commodity markets experienced significant volatility during the year, driven primarily by disruptions in global energy supplies. The World Bank expects overall commodity prices to increase by approximately 22% during 2026, reversing earlier expectations of declining prices.

Brent crude oil prices are projected to average US$94 per barrel, nearly 36% higher than 2025, while natural gas and fertilizer prices have also witnessed substantial increases due to supply disruptions and elevated input costs. Rising commodity prices continue to impact manufacturing, logistics, transportation, chemicals, refrigeration, and industrial production globally, reinforcing the importance of supply chain resilience and operational efficiency.

Technology and Trade Continue to Support Long-Term Growth

Despite short-term economic challenges, structural growth drivers remain intact. Rapid advancements in Artificial Intelligence (AI), automation, digital infrastructure, and advanced manufacturing technologies continue to enhance productivity across industries. Increased investments in Al-enabled solutions and digital transformation are expected to improve operational efficiencies and support long-term economic growth.

Global trade has also shown resilience despite geopolitical disruptions. Continued trade liberalization efforts, growing regional partnerships, and diversification of global supply chains have supported international commerce and strengthened manufacturing investment across several emerging economies. These trends are expected to enhance global competitiveness and foster sustainable industrial growth over the medium term.

Emerging Economies Continue to Lead Global Expansion

Emerging Market and Developing Economies (EMDEs) remain the primary drivers of global economic growth despite a moderation in overall expansion. The World Bank forecasts EMDE growth at 3.6% during 2026, supported by resilient domestic demand, infrastructure investments, expanding manufacturing ecosystems, and ongoing digital transformation initiatives.

Asia continues to play a pivotal role in global economic activity, supported by large consumer markets, competitive manufacturing capabilities, and increasing investments in industrial development. These economies remain well-positioned to benefit from shifting global supply chains and growing investments in technology, clean energy, and advanced manufacturing.

Risks and Outlook

While the medium-term outlook remains positive, several downside risks continue to influence the global economy. Escalation of geopolitical conflicts, prolonged disruptions in energy supplies, persistent inflation, elevated public debt levels, climate-related events, and trade fragmentation may continue to weigh on global growth.

At the same time, sustained investments in artificial intelligence, digital infrastructure, renewable energy, regional manufacturing, and global supply chain diversification are expected to strengthen economic resilience and support long-term productivity improvements. As inflation gradually moderates and financial conditions stabilize, the global economy is expected to return to a more balanced growth trajectory over the coming years.

Source: World Bank - Global Economic Prospects, June 2026

2. Indian Economic Outlook

India Continues to Outperform the Global Economy

Amid an uncertain global backdrop, India continues to stand out as one of the fastest-growing major economies, supported by resilient domestic demand, strong public investment, expanding manufacturing activity, and sustained structural reforms. The countrys diversified economic base, favourable demographics, and improving business environment continue to reinforce its position as a preferred destination for global investment and industrial expansion.

According to the World Bank, Indias economy is projected to grow by 6.6% in FY2026-27, significantly outperforming most advanced and emerging economies. Growth is expected to remain broad-based, supported by private consumption, infrastructure development, manufacturing expansion, digital transformation, and increasing private sector investments.

Infrastructure and Manufacturing Strengthen Economic Momentum

Large-scale public investments in transport infrastructure, logistics, renewable energy, urban development, and industrial corridors continue to improve Indias long-term competitiveness. Programmes such as PM Gati Shakti,

the National Infrastructure Pipeline, and the Production Linked Incentive (PLI) Scheme are accelerating industrial capacity creation while attracting both domestic and foreign investments.

India also continues to benefit from global supply chain diversification, with multinational companies increasingly expanding manufacturing operations across sectors including electronics, engineering, specialty chemicals, pharmaceuticals, semiconductors, and renewable energy equipment. These developments are strengthening Indias role within global value chains while creating significant employment and investment opportunities.

Digital Transformation Accelerates Industrial Competitiveness

Indias rapidly expanding digital ecosystem continues to enhance productivity across businesses and government institutions. Increased adoption of Artificial Intelligence, cloud technologies, automation, digital payments, and Industry 4.0 solutions is transforming manufacturing and service sectors alike.

The countrys strong startup ecosystem, widespread digital infrastructure, and technology-led innovation continue to improve ease of doing business while creating new opportunities for productivity enhancement and value creation across industries.

A Favourable Environment for Industrial Growth

Indias expanding industrial ecosystem presents significant opportunities across manufacturing-intensive sectors including industrial gases, refrigeration, air-conditioning, pharmaceuticals, specialty chemicals, electronics, and advanced engineering. Rising urbanisation, increasing investments in healthcare, cold-chain logistics, food processing, renewable energy, and semiconductor manufacturing continue to generate sustained demand for high-performance industrial products and technologically advanced solutions.

Continued government support for domestic manufacturing, export promotion, and ease of doing business is expected to further strengthen industrial competitiveness and encourage higher capital investments across strategic sectors.

Outlook

Indias long-term growth story remains firmly intact. Supported by favourable demographics, rising domestic consumption, policy continuity, expanding infrastructure, and sustained manufacturing investments, the country is well-positioned to remain one of the worlds fastest-growing large economies.

While external risks such as geopolitical uncertainty, commodity price volatility, and global financial conditions may influence short-term economic performance, Indias resilient macroeconomic fundamentals, reform- oriented policy framework, and increasing integration into global supply chains are expected to support sustainable and inclusive growth over the long term.

Source: World Bank - Global Economic Prospects, June 2026

3. Global Fluorochemicals Industry

An Essential Industry Supporting the Global Industrial Economy

The global fluorochemicals industry continues to play a pivotal role in enabling technological innovation and industrial development across multiple sectors. Characterized by exceptional thermal stability, chemical resistance, electrical insulation, and durability, fluorochemicals have become indispensable in applications ranging from refrigeration and air conditioning to semiconductors, electric vehicles, pharmaceuticals, renewable energy, and advanced manufacturing.

The industry has evolved beyond its traditional dependence on refrigerants and now serves as a critical supplier to high-growth sectors requiring high-performance materials. Rapid advancements in electronics, clean energy technologies, healthcare, and industrial automation are expanding the scope of fluorochemicals, positioning the industry as a key enabler of next-generation technologies. As global industries increasingly prioritize efficiency, sustainability, and product performance, demand for advanced fluorochemical solutions continues to strengthen.

Steady Market Expansion Supported by Diversified End-Use Industries

According to Fortune Business Insights, the global fluorochemicals market was valued at USD 29.18 billion in 2025 and is projected to grow to USD 30.48 billion in 2026, reaching approximately USD 43.20 billion by 2034, registering a CAGR of 4.46% during the forecast period. The industrys long-term growth reflects the increasing adoption of fluorochemicals across industrial, commercial, and consumer applications, supported by expanding manufacturing activity and technological innovation worldwide.

Unlike many specialty chemical segments that are concentrated within a limited number of industries, fluorochemicals benefit from a diversified demand base. Their unique performance characteristics make them essential across refrigeration, electronics, industrial processing, aluminum production, medical devices, automotive systems, construction materials, and high-performance polymers. This diversified application profile enhances the industrys resilience against cyclical fluctuations in individual sectors while supporting long-term sustainable growth.

Technological Advancements Continue to Expand Market Applications

Continuous innovation remains one of the defining characteristics of the fluorochemicals industry. Increasing investments in research and development are enabling manufacturers to develop advanced fluoropolymers, specialty fluorinated compounds, and high-performance materials that meet increasingly demanding industrial specifications.

The electronics and semiconductor industries have emerged as significant growth drivers due to the widespread use of fluorochemicals in plasma etching, wafer fabrication, display panel manufacturing, and precision cleaning processes. Similarly, the healthcare sector continues to utilize fluorinated compounds in pharmaceutical manufacturing, medical devices, and specialized chemical intermediates.

Fluoropolymers are also witnessing growing adoption across electric vehicles, aerospace, renewable energy systems, industrial coatings, wire and cable insulation, and advanced engineering applications owing to their superior chemical resistance, lightweight properties, and long operational life. As industries continue to embrace automation, miniaturization, and electrification, demand for high-performance fluorochemical products is expected to increase further.

Refrigerants Continue to Represent the Largest Demand Segment

Refrigeration and air-conditioning continue to account for one of the largest application segments within the fluorochemicals industry. Rising urbanization, improving living standards, expanding cold-chain infrastructure, and increasing demand for climate control solutions are supporting sustained growth in refrigerant consumption across both developed and emerging economies.

Growing investments in commercial refrigeration, data centres, pharmaceuticals, food processing, healthcare infrastructure, and logistics are further expanding demand for advanced refrigerant technologies. At the same time, the industrys transition toward low-global warming potential (GWP) refrigerants is accelerating innovation, encouraging manufacturers to develop environmentally responsible alternatives while maintaining high levels of energy efficiency and operational performance.

Asia Pacific Continues to Lead Global Growth

Asia Pacific remains the largest and fastest-growing regional market for fluorochemicals, supported by rapid industrialization, expanding manufacturing capacity, and increasing investments across electronics, chemicals, refrigeration, automotive, and infrastructure sectors. Countries such as China, India, Japan, and South Korea continue to strengthen their position within global supply chains through ongoing investments in industrial production and advanced manufacturing capabilities.

The regions growing middle-class population, rising demand for consumer appliances, expanding healthcare infrastructure, and increasing adoption of electric vehicles continue to generate significant opportunities for fluorochemical manufacturers. Simultaneously, multinational companies are expanding manufacturing operations across Asia to diversify global supply chains and strengthen regional production capabilities.

Sustainability and Regulatory Compliance Shape the Next Phase of Growth

Environmental regulations continue to influence the strategic direction of the fluorochemicals industry. Governments and regulatory agencies across the world are encouraging the adoption of environmentally sustainable products, particularly within refrigerants and industrial chemicals. This transition is driving investments in low-GWP refrigerants, next-generation fluoropolymers, and environmentally responsible production technologies.

Manufacturers are increasingly focusing on process efficiency, emissions reduction, circular economy initiatives, and responsible product stewardship to comply with evolving global regulations while maintaining competitiveness. At the same time, ongoing research into advanced fluorinated materials is creating opportunities across renewable energy, hydrogen technologies, battery systems, and high-performance electronics.

Industry Outlook

The long-term outlook for the global fluorochemicals industry remains positive, supported by structural demand from high-growth industries including semiconductors, electric vehicles, healthcare, renewable energy, electronics, and advanced manufacturing. Continued technological innovation, expanding industrial applications, and increasing investments in sustainable products are expected to reinforce market growth over the coming decade.

Although evolving environmental regulations and raw material cost volatility remain important considerations, the industrys diversified end-user base, strong innovation pipeline, and expanding role in enabling advanced industrial technologies position it for sustained long-term growth. As manufacturers continue to invest in capacity expansion, product innovation, and environmentally responsible solutions, the fluorochemicals sector is expected to remain an integral component of the global specialty chemicals industry.

Source: Fortune Business Insights

4. Indian Fluorochemicals Industry

Indias Industrial Expansion Strengthens the Fluorochemicals Market

Indias fluorochemicals industry is witnessing strong growth, driven by rapid industrialization, expanding manufacturing activities, and increasing adoption of high-performance materials across multiple end-user industries. Fluorochemicals have become an integral part of Indias industrial ecosystem owing to their superior resistance to heat, chemicals, corrosion, and electrical conductivity. These unique properties make them indispensable across sectors such as chemicals, pharmaceuticals, electronics, automotive, textiles, aerospace, and industrial processing.

According to MarkNtel Advisors, the India Fluorochemicals Market was valued at approximately USD 622 million in 2022 and is projected to expand at a CAGR of around 10.24% during 2024-2029. The industrys growth is supported by increasing investments in manufacturing, favourable government initiatives, and rising demand for advanced specialty materials across domestic industries.

Industrial Growth Continues to Drive Market Demand

The rapid expansion of Indias industrial sector remains the primary growth driver for the fluorochemicals market. Continuous investments across chemicals, petrochemicals, electronics, automotive, pharmaceuticals, and renewable energy are creating sustained demand for fluorochemical products.

Within the chemical and petrochemical industries, fluorochemicals are extensively used in corrosion-resistant linings, seals, gaskets, and process equipment operating under demanding chemical environments. Their superior durability and resistance to aggressive chemicals enhance equipment reliability and operational efficiency, making them critical materials for industrial manufacturing.

Similarly, Indias expanding electronics industry relies heavily on fluorochemicals for wire and cable insulation, semiconductor manufacturing, dielectric materials, and other high-performance electronic applications. As domestic electronics manufacturing continues to grow, supported by government initiatives and foreign investments, demand for fluorinated materials is expected to strengthen further.

Government Initiatives Create Long-Term Growth Opportunities

Government programmes aimed at strengthening domestic manufacturing continue to provide significant growth opportunities for the fluorochemicals industry. Initiatives such as Make in India and increasing focus on electronics manufacturing, renewable energy equipment, and electric vehicles are expanding the countrys industrial base while generating higher demand for fluorochemical products.

As production capacities increase across these strategic sectors, fluorochemicals are expected to play an increasingly important role as critical raw materials supporting manufacturing processes and advanced industrial applications. The continued modernization of Indias industrial infrastructure is expected to sustain long-term market expansion.

Fluoropolymers Lead Product Demand

Among the various product categories, fluoropolymers account for the largest share of the Indian fluorochemicals market. Their exceptional resistance to chemicals, high temperatures, and electrical stress makes them the preferred material across several industrial applications.

Fluoropolymers are widely used in chemical processing equipment, storage tanks, industrial linings, wire and cable insulation, semiconductor manufacturing, and high-performance engineering applications. As industries continue to modernize and adopt advanced manufacturing technologies, demand for fluoropolymers is expected to remain strong throughout the forecast period.

Electronics Industry Emerges as the Largest End User

The electrical and electronics sector represents the largest end-user segment for fluorochemicals in India. Products such as PTFE and PFA are extensively used for insulation, dielectric applications, and high-temperature electrical components due to their excellent performance characteristics.

The report highlights Indias growing electronics consumption and the Governments objective of expanding domestic electronics manufacturing as major factors supporting long-term demand. Increased investments in telecommunications, electronics production, and semiconductor-related activities are expected to further accelerate the adoption of fluorochemicals across this segment.

Transition Towards Sustainable Refrigerants

Environmental sustainability is emerging as one of the most significant trends shaping the fluorochemicals industry. Growing regulatory focus on reducing greenhouse gas emissions is accelerating the transition toward low Global Warming Potential (Low-GWP) refrigerants.

International initiatives such as the Kigali Amendment to the Montreal Protocol are encouraging the adoption of environmentally friendly refrigerant technologies. Consequently, alternatives such as hydrofluoroolefins (HFOs), ammonia, carbon dioxide, and blended refrigerants are witnessing increasing acceptance within the Indian market.

Leading global manufacturers are expanding investments in low-GWP refrigerants and advanced cooling technologies to meet evolving environmental standards and support Indias sustainability objectives.

Healthcare Sector Offers Emerging Growth Opportunities

Beyond traditional industrial applications, the pharmaceutical and healthcare sector presents significant growth opportunities for fluorochemicals. Increasing development of complex pharmaceutical molecules and specialized drug formulations is driving demand for fluorinated intermediates and advanced fluorination technologies.

As Indias pharmaceutical industry continues to expand its global presence, demand for high-performance fluorochemical products is expected to increase, creating new opportunities for manufacturers operating within the specialty chemicals segment.

Industry Outlook

The outlook for the Indian fluorochemicals industry remains highly positive. Rapid industrialization, increasing manufacturing investments, expanding electronics production, rising pharmaceutical demand, and supportive government policies are expected to continue driving market growth over the forecast period.

While investments required for developing low-GWP technologies and evolving environmental regulations present certain challenges, the industrys diversified application base, technological advancements, and expanding end-user demand position it for sustained long-term growth. As India strengthens its manufacturing capabilities and integrates further into global industrial supply chains, the fluorochemicals industry is expected to play an increasingly strategic role within the countrys specialty chemicals sector.

Source: MarkNtel Advisors

5. About the Company

Established Legacy

Since its incorporation in 2002, Stallion India Fluorochemicals Limited has established itself as a trusted name in Indias refrigerant and industrial gases industry. Drawing upon more than three decades of industry expertise through its legacy operations, the Company has developed deep technical capabilities in the processing, debulking, blending, storage and distribution of refrigerant, specialty and industrial gases. Over the years, Stallion has consistently strengthened its operational capabilities while maintaining an unwavering focus on quality, safety and customer satisfaction, enabling it to build enduring relationships across a diversified industrial customer base.

Strong Market Presence

Stallion has established a robust pan-India operational network through four strategically located manufacturing facilities at Khalapur and Panvel in Maharashtra, Ghiloth in Rajasthan and Manesar in Haryana. These facilities are equipped to undertake gas debulking, blending, laboratory testing and cylinder filling while adhering to stringent safety and quality protocols. The Companys nationwide presence enables efficient product availability, responsive customer service and reliable supply across key industrial clusters. Today, Stallion serves over 200 customers spanning more than 15 industry segments, reinforcing its position as a preferred partner for customized refrigerant and industrial gas solutions.

Diversified Product Portfolio

The Company offers a comprehensive portfolio comprising over 40 gases, including Hydrofluorocarbons (HFCs), Hydrofluoroolefins (HFOs), Hydrocarbons (HCs), specialty gases, semiconductor gases and high-purity industrial gases. Its products cater to a broad spectrum of applications across air conditioning and refrigeration, automotive, pharmaceuticals, medical, electronics, semiconductors, defence, fire protection, glass manufacturing and several other industrial sectors.

A key differentiator for Stallion lies in its expertise in customized gas blending and value-added processing. Rather than competing solely as a conventional refrigerant supplier, the Company delivers application-specific gas solutions that address evolving customer requirements, creating long-term value through technical expertise and product customization.

Operational Excellence

Operational excellence continues to remain a cornerstone of Stallions business philosophy. The Companys manufacturing facilities are designed to ensure precision processing, efficient storage and safe handling of gases while maintaining stringent quality assurance standards. Comprehensive laboratory testing, modern filling systems and robust safety protocols enable the Company to consistently deliver products that meet demanding customer specifications.

Complementing its operational capabilities is an agile supply chain and experienced technical workforce, allowing Stallion to maintain high service reliability, optimize turnaround times and support customers with consistent product availability across geographies. These capabilities have contributed significantly to the Companys reputation for quality, reliability and operational efficiency.

Strategic Growth Initiatives

FY2025-26 marked a defining year in Stallions strategic evolution as the Company accelerated its transition from a leading refrigerant gas processor and distributor to an integrated fluorochemicals and specialty gases platform. During the year, Stallion commenced development of its proposed 10,000 MT R-32 manufacturing facility at Bhilwara, Rajasthan, following the receipt of Environmental Clearance. The project represents the Companys first major backward integration initiative and is expected to strengthen raw material security, improve operational efficiencies and enhance long-term competitiveness.

Recognizing the growing importance of helium in high-technology industries, the Company further strengthened its strategic capabilities through a technology collaboration with Portugal-based SYS ADVANCE, a globally recognized developer of Helium Recovery and Liquefaction Systems. The collaboration provides Stallion access

to advanced helium recovery and liquefaction technologies for applications across space, defence and other high-precision industries, significantly enhancing the Companys technological capabilities in specialty gases.

Complementing this initiative, Stallion entered into a long-term strategic partnership with Sharjah Oxygen Company (SOC), Dubai, for sourcing liquid helium from RAS Gases & Oilfields, Qatar, one of the worlds leading helium-producing facilities. The partnership strengthens the Companys global supply chain, ensuring reliable access to high-purity helium for customers across semiconductor manufacturing, healthcare, aerospace, research and other advanced industrial applications. Together, these strategic collaborations reinforce Stallions ambition to build an integrated, technology-driven industrial gases platform with global partnerships supporting sustainable long-term growth.

Building the Business of Tomorrow

As industries increasingly transition towards environmentally sustainable technologies and advanced manufacturing, Stallion is strategically positioning itself to address future demand through capacity expansion, product diversification and investments in next-generation fluorochemicals.

A significant milestone in this journey was the signing of a Memorandum of Understanding with the Government of Rajasthan for establishing a Hydrofluoroolefin (HFO) manufacturing facility at Bhilwara (Hurda), Rajasthan. The proposed investment of approximately Rs.200 crore, with construction targeted to commence in 2027, reflects the Companys commitment to developing domestic manufacturing capabilities for next-generation, low-global-warming-potential refrigerants. The HFO facility, following the planned commissioning of the R-32 project, represents the next phase of Stallions calibrated expansion strategy and is expected to significantly strengthen its product portfolio while enhancing Indias self-reliance in specialty chemicals and fluorochemicals.

Alongside these investments, the Company continues to expand its presence in specialty and semiconductor gases while strengthening its pan-India manufacturing footprint through upcoming facilities at Khalapur and Mambattu. By combining backward integration, specialty gas capabilities, advanced manufacturing technologies and strategic global partnerships, Stallion is building a future-ready business model that is well-positioned to capitalize on emerging opportunities across refrigerants, fluorochemicals, semiconductors and high-purity industrial gases, creating a scalable platform for sustainable long-term value creation.

6. Financial Highlights

FY2025-26 was a landmark year for Stallion India Fluorochemicals Limited as the Company delivered robust financial performance while simultaneously laying the foundation for its next phase of growth through strategic investments in manufacturing capacities, specialty gases and technology partnerships. Strong demand across refrigerants and industrial gases, continued expansion of the customer base and operational efficiencies contributed to healthy growth across key financial parameters.

The Company reported Revenue from Operations of Rs.434.12 Crore, representing a 14.40% year-on-year growth, supported by higher sales volumes, an improving product mix and sustained demand across multiple end-user industries. Profitability remained resilient during the year, with EBITDA increasing to Rs.61.35 Crore, reflecting operational efficiencies and disciplined cost management. Profit After Tax (PAT) stood at Rs.43.84 Crore, registering a 35.61% year-on-year growth, demonstrating the Companys ability to translate revenue growth into sustainable earnings.

The Companys balance sheet continued to strengthen during the year, supported by healthy cash generation and prudent financial management. At the same time, Stallion initiated strategic capital investments aimed at strengthening backward integration, expanding specialty gas capabilities and creating future manufacturing capacities, reinforcing its long-term growth strategy.

The successful completion of the Initial Public Offering during the year further strengthened the Companys capital base, enabling it to accelerate investments across manufacturing infrastructure, technology partnerships and next-generation fluorochemicals. These initiatives position Stallion to capitalize on emerging opportunities while creating a scalable platform for sustainable long-term value creation.