Stallion India Fluorochemicals Ltd Management Discussions

The global economic landscape in 2025 remains complex and uneven, shaped by a mix of robust performance in select economies and persistent challenges elsewhere. According to the IMFs January 2025 World Economic Outlook, global GDP growth is projected to remain steady at 3.3% in both 2025 and 2026, below the historical average of 3.7% (2000-2019). This stability masks considerable divergences between advanced and emerging markets.

Advanced Economies

Growth across advanced economies is forecast at 1.9% in 2025, with significant variation. The United States economy continues to outperform, supported by strong consumption and favorable financial conditions, with growth estimated at 2.7% — a 50-basis point upgrade from previous projections. By contrast, the Euro Area faces a more subdued recovery, with growth expected at 1.0%, reflecting manufacturing weakness and elevated policy and geopolitical uncertainty.

Emerging Markets and Developing Economies

Growth in emerging and developing economies is projected at 4.2% in 2025, broadly unchanged from 2024. India remains a standout performer, with a growth forecast of 6.5%, underpinned by robust domestic demand and structural reform momentum. China is expected to grow at 4.6%, as fiscal support partly offsets continued softness in the property sector and sluggish consumer confidence.

Inflation and Monetary Policy

Headline global inflation is projected to decline to 4.2% in 2025 and 3.5% in 2026, converging more quickly to central bank targets in advanced economies. While core goods price inflation has eased, services inflation remains elevated, particularly in the U.S. and Eurozone. Central banks are proceeding cautiously on monetary easing, balancing inflation control with the need to support economic recovery.

Trade and Financial Conditions

World trade volume growth has been revised downward to 3.2% for 2025, impacted by increased trade policy uncertainty and geopolitical tensions. Meanwhile, global financial conditions remain broadly accommodative, though tightening is evident in emerging markets due to currency pressures, rising risk premiums, and a stronger U.S. dollar. Markets are particularly sensitive to developments related to tariffs and fiscal policy outlooks in key economies.

Risks to the Outlook

The IMF underscores that medium-term risks remain tilted to the downside. Potential triggers include:

• Escalation in protectionist policies, such as new tariffs.

• Volatile commodity prices stemming from geopolitical conflicts, notably in the Middle East and Eastern Europe.

• Renewed inflationary pressures that could prompt central banks to delay rate cuts or tighten further.

• Rising fiscal vulnerabilities, particularly in economies with high public debt.

That said, upside potential exists. Cooperative trade agreements, policy clarity, and structural reforms aimed at enhancing productivity and investment could lift confidence and support medium-term global growth.

INDIAN ECONOMIC OUTLOOK

Indias real GDP is projected to grow by 6.3 percent in FY2025-26 and 6.4 percent in FY2026-27, reflecting continued momentum in economic activity. Private consumption is expected to gradually strengthen, supported by rising real incomes, moderate inflation, recent tax reductions, and improvements in the labour market. On the investment front, lower interest rates and substantial public capital expenditure are expected to sustain momentum, although higher US tariffs may present headwinds for export growth.

Inflation is projected to remain contained at around 4 percent, broadly in line with the Reserve Bank of Indias target, as the economy expands around its potential. However, risks persist from a less favourable monsoon season and elevated global commodity prices, which could exert upward pressure on food inflation.

The Union Budget for FY2025-26 outlines a path of moderate fiscal consolidation, with the fiscal deficit expected to narrow from 4.8 percent of GDP in FY2024- 25 to 4.4 percent. With inflation remaining within the target range, monetary policy is expected to gradually become more accommodative, providing further support to growth.

Structural policy measures focused on improving the targeting of energy and fertilizer subsidies, along with a review of tax expenditures, are likely to enhance the efficiency of public spending and free up resources for development priorities. In addition, sustained efforts to improve logistics infrastructure, accelerate digital transformation, and strengthen policy predictability, particularly in tax administration, are expected to boost private sector investment and support long-term economic expansion.

Domestic demand supports activity

Indias real GDP grew by 6.2 percent year-on-year in the third quarter of FY2024-25, driven by strong domestic demand and sustained investment momentum. High- frequency indicators point to continued resilience in the fourth quarter, suggesting solid overall economic activity. Industrial production increased by 3.7 percent year- on-year during the first four months of 2025, with the manufacturing sector showing signs of renewed strength.

The current account deficit widened during the first three quarters of FY2024-25, primarily due to a persistent merchandise trade deficit. This was partially offset by robust services exports. However, more recent data indicates a slight improvement in the trade balance, suggesting some easing of external pressures.

The labour market remained stable through 2024, with the labour force participation rate rising to 45.1 percent and employment continuing to improve. Survey-based data from early 2025 reflects growing optimism, particularly in sectors such as information technology, retail, and financial services.

Monetary conditions remained tight despite policy rate reductions in February and April 2025. Headline inflation moderated to 3.2 percent in April, falling within the Reserve Bank of Indias target range of 4 percent plus or minus 2 percent. This decline was primarily attributed to easing food inflation, which constitutes nearly half of the Consumer Price Index basket, as well as declining energy prices. The drop in food inflation was supported by a strong autumn harvest and policy interventions including export restrictions.

India, being a major oil importer, has also benefited from lower global crude oil prices, which have helped reduce domestic fuel costs and input costs in energy-intensive industries such as transportation, manufacturing, and agriculture. While core inflation remains slightly above 4 percent, wage growth has been moderate and contained.

The countrys significant merchandise export exposure to the United States, which remains its largest export market, creates some vulnerability in private investment to evolving trade policy dynamics. Tariff increases and broader trade tensions could affect investor confidence, particularly in export-oriented sectors such as chemicals, textiles, and electronics. Nevertheless, the overall impact on GDP is expected to be limited, given the relatively modest share of exports in the economy, with merchandise exports to the United States accounting for only 2.1 percent of GDP.

OECD Economic Outlook, Volume 2025 Issue 1: India : OECD

GLOBAL FLUOROCHEMICALS INDUSTRY OVERVIEW

• The global fluorochemicals market has shown strong growth in recent years, expanding from USD 26.86 billion in 2024 to an estimated USD 28.7 billion in 2025, registering a CAGR of 6.8%.

• The market is projected to reach USD 36.93 billion by 2029, reflecting a healthy CAGR of 6.5% over the forecast period (2025-2029).

• Growth is driven by rising demand across key sectors such as refrigeration, electronics, automotive, and pharmaceuticals, alongside increased focus on climate- resilient and energy-efficient solutions.

Key Growth Drivers

• Refrigerants Demand Surge

Rapid urbanization and changing climate patterns are accelerating demand for air conditioning and refrigeration systems globally. Fluorochemicals, particularly hydrofluorocarbons (HFCs), are integral due to their thermal efficiency and safety characteristics.

- For example, the US EPA reported a 40%+ increase in HFC refrigerant volume in 2023 vs. 2021.

- Australias equipment stock for refrigeration and air conditioning rose from 58.1 million units in 2020 to 60 million in 2021 (International Institute of Refrigeration).

• Industrial & Specialty Applications

Rising use of fluorochemicals in industrial coatings, surface treatments, and electronics manufacturing is contributing to structural demand.

• Advanced Fluoropolymers & Elastomers

Innovations such as fluorinated synthetic rubbers and high-performance fluoropolymers are expanding applications in oil & gas, aerospace, and chemical processing.

- Example: Solvay launched Tecnoflon SHP, a fluorinated rubber offering chemical resistance up to 315?C and performance in extreme environments.

• Technological Advancements

Enhanced R&D is fostering the development of next- generation fluorinated materials with improved environmental performance and material efficiency.

Opportunities

• Eco-Friendly Substitutes & Low-GWP Alternatives

Regulatory shifts are encouraging the development of low-global warming potential (GWP) alternatives to legacy fluorocarbons, opening opportunities for specialty chemical players.

• Growth in Asia-Pacific Markets

APAC, led by China, India, and Southeast Asia, is expected to be the fastest-growing region driven by manufacturing expansion, urban infrastructure, and cooling demand.

• Investments in Specialty Manufacturing

Companies are scaling up high-purity fluorochemical production for semiconductors, EV batteries, and life sciences, leveraging favorable policies and demand tailwinds.

Challenges & Headwinds

• Regulatory Pressure

Increasing scrutiny on per- and polyfluoroalkyl substances (PFAS) and HFCs may lead to stricter controls and phase-outs in certain geographies.

• Feedstock Volatility

Prices of raw materials such as fluorspar and energy inputs remain volatile, impacting cost structures and margins.

• Geopolitical Disruptions

Trade policy changes, especially between the US, China, and EU, could influence supply chain reliability and cross-border sourcing.

Competitive Landscape

• The industry is moderately consolidated, with major global and regional players focusing on product innovation, vertical integration, and capacity expansions.

• Key global players include: Zhejiang Juhua Co Ltd, Zhejiang Sanmei Chemical Industry Co., Ltd, Zhejiang Yonghe Refrigerant Co., Ltd., Shanghai Huayi 3F New Materials & Honeywell

• North America was the largest regional market in 2024, owing to strong demand in semiconductors, air conditioning, and medical devices.

• Asia-Pacific is poised to become the fastest-growing region due to industrial expansion, infrastructural development, and supportive regulatory frameworks.

Indian Fluorochemicals Industry

The fluorochemicals market in India is experiencing steady growth, driven by increasing demand across industries such as refrigeration, automotive, electronics and pharmaceuticals with a focus on environmentally friendly and high-performance fluorocheimical products. The market is expected to grow by USD 200-500 million at a CAGR of 9%-12% between 2025 and 2029. Exact values for this market can be accessed upon purchasing the report.

Growth Drivers

The growth of the Indian fluorochemicals market is being propelled by multiple structural drivers:

• Environmental Regulations and Sustainability Mandates: Regulatory frameworks such as the Kigali Amendment are accelerating the phase-out of high-GWP refrigerants, boosting demand for hydrofluoroolefins (HFOs) and natural refrigerants.

• Rising Adoption of Energy-Efficient Technologies: Government initiatives to promote energy efficiency have stimulated demand for sustainable refrigerants and insulation materials across industrial and residential applications.

• Expanding End-Use Industries: The automotive, electronics, pharmaceutical, and agrochemical sectors are key consumers of fluorochemicals. In particular, the growing penetration of electric vehicles (EVs) and advancements in high-performance electronics are driving the consumption of fluoropolymers, owing to their thermal stability, chemical resistance, and insulation properties.

• Supportive Industrial Growth: Broader industrial expansion and urbanization trends in India are further supporting demand across HVAC, coatings, and chemical processing sectors.

Market Trends

The Indian fluorochemicals market is evolving with several notable trends:

• Focus on Low-GWP Alternatives: Market participants are investing in the development of next-generation refrigerants and materials with minimal environmental impact.

• Increased Use of High-Performance Fluoropolymers: Advanced fluorinated materials are seeing increased adoption in critical applications such as EV batteries, cable insulation, and specialized coatings.

• Manufacturing Innovation: Companies are leveraging technology to enhance production efficiency, reduce costs, and improve quality, thereby strengthening their competitive positioning.

• Digitization of Operations: The integration of digital solutions in process control and supply chain management is enabling better traceability and operational agility.

Opportunities

Significant growth opportunities exist across various segments of the Indian fluorochemicals market:

• Electric Mobility: The transition towards EVs is generating strong demand for fluorochemicals used in battery electrolytes, thermal management systems, and electronic components.

• Green Cooling Solutions: As the country upgrades its cooling infrastructure, there is a growing need for energy-efficient, environmentally friendly refrigerants.

• Pharmaceuticals and Agrochemicals: The expansion of these sectors offers opportunities for specialized fluorochemicals used in the synthesis of active pharmaceutical ingredients (APIs) and crop protection agents.

• Renewable Energy and Electronics: Emerging technologies in solar panels, semiconductors, and smart devices require durable, high-performance fluorinated materials.

Threats and Challenges

Despite its growth potential, the fluorochemicals market in India faces several structural challenges:

• Raw Material Constraints: The production of key inputs such as hydrofluoric acid is capital-intensive and relies on limited sources, posing supply chain vulnerabilities.

• Environmental Compliance: Adhering to evolving global and domestic environmental norms necessitates continual investment in R&D and process innovation.

• Cost Pressures: High production costs, combined with volatility in global chemical prices, can affect margins and pricing competitiveness.

• Competitive Intensity: Both domestic and international players are active in the Indian market, driving the need for differentiation through innovation and quality.

ABOUT THE COMPANY

Founded in 2002 and headquartered in Mumbai, Stallion India Fluorochemicals Limited is a leading player in the Indian refrigerant and industrial gases market. The Company offers a diverse range of refrigerant gases, specialty gases, and related HVAC-R consumables, serving applications across air-conditioning, refrigeration, automotive, pharmaceuticals, electronics, and fire-fighting sectors. With strategically located facilities in Maharashtra, Haryana, and Rajasthan, and upcoming capacity in Andhra Pradesh, Stallion operates an agile supply chain and maintains stringent quality and safety standards. A strong aftermarket focus, technology partnerships, and planned expansions into specialty gases position the Company to capture opportunities in emerging high-growth segments.

Legacy and Evolution:

From its early years as a focused distributor, Stallion expanded its footprint through strategic investments in processing facilities and logistics assets. This forward integration enabled it to exercise greater control over quality, shorten delivery cycles, and enhance customer satisfaction. Over time, the Company has diversified its end-use industry exposure and established strong relationships with OEMs, aftermarket service providers, and industrial buyers. Today, Stallion commands a notable market share in Indias refrigerant segment, driven by its operational scale, customer focus, and adherence to global quality standards.

Manufacturing & Infrastructure:

Stallion operates multiple state-of-the-art facilities strategically located to ensure pan-India coverage and quick turnaround times. These facilities are equipped with automated debulking and blending systems, high- precision filling equipment, scalable storage capacities, and in-house quality control laboratories. Safety and compliance are integral to the Companys operations, with processes aligned to ISO-certified standards and reinforced through regular audits and training programs. The upcoming capacity expansions—both in traditional refrigerant processing and emerging specialty gases— are designed to meet growing demand from industrial and technology-driven sectors, while supporting the Companys long-term growth roadmap.

Supply Chain & Distribution Network:

The Company has developed a robust and agile supply chain capable of serving a wide spectrum of customers across India. Decentralised facilities, strategically located near demand hubs, minimise logistics costs and enable near real-time supply to customers. This model also ensures resilience against regional disruptions and allows Stallion to maintain consistent service levels. Well- established vendor relationships, efficient procurement practices, and advanced inventory management systems further strengthen the Companys supply reliability.

Promoters & Leadership:

The Company is led by its Founder, Chairman & Managing Director, Mr. Shazad Sheriar Rustomji, whose vision and industry expertise have been instrumental in shaping Stallions growth trajectory. Supported by an experienced management team, the leadership focuses on operational excellence, strategic diversification, and sustainable business practices. The governance framework prioritises transparency, accountability, and compliance with regulatory requirements, creating a strong foundation for stakeholder trust.

Strategic Positioning:

Stallions business model is aligned with global trends in environmental compliance, energy efficiency, and green chemistry. By focusing on emerging applications in sectors such as electronics, semiconductors, renewable energy, and high-value industrial processes, the Company is positioning itself to benefit from structural demand shifts. Its strategic emphasis on the aftermarket segment ensures recurring revenue streams, while backward integration plans are expected to enhance cost control and margin resilience.

Commitment to Quality, Safety & Sustainability:

Quality assurance is embedded across every stage of Stallions operations. Each facility maintains advanced testing capabilities to ensure product consistency and regulatory compliance. The Companys safety protocols—covering material handling, leak prevention, fire control, and waste management—are benchmarked against international best practices. In addition, Stallions sustainability initiatives align with tightening domestic and global regulations on refrigerants and industrial gases, ensuring readiness for future environmental standards.

Growth Outlook:

Looking ahead, Stallion aims to deepen its market penetration through capacity expansions, entry into new high-growth verticals, and enhancement of its distribution reach. Investments in technology, automation, and digital platforms will further streamline operations and strengthen customer engagement. With its strong operational backbone, diversified industry exposure, and clear strategic roadmap, the Company is well-positioned to capture opportunities in Indias rapidly evolving industrial and technology landscape.

FINANCIAL OVERVIEW

During FY25, Stallion India Fluorochemicals Limited delivered robust financial performance marked by strong revenue growth and improving profitability, reflecting operational efficiencies and strategic execution.

Full-Year FY25 Performance:

• Total Revenue stood at Rs379.47 crore in FY25, up 61% from Rs236.23 crore in FY24.

• EBITDA increased by 85% year-on-year to Rs49.74 crore (FY24: Rs26.85 crore), with EBITDA margin improving to 13.11% in FY25 from 11.37% in FY24.

• Profit After Tax (PAT) grew to Rs32.33 crore in FY25 from Rs15.47 crore in FY24, marking a 109% increase.

- Excluding a one-time provision of Rs10.71 crore related to an old settlement, adjusted PAT stood at Rs43.04 crore.

• PAT Margin improved to 8.52% in FY25 from 6.55% in FY24.

Balance Sheet and Liquidity:

• Net Worth improved significantly to Rs300.84 crore as of March 31, 2025, compared to YI25.26 crore in FY24.

• The company maintained a strong liquidity position with Cash & Bank Balances of Rs75.01 crore in FY25.