01 — At a Glance
When Your Stock Moves 13.82% in One Day But Nobody Notices
- 52-Week High / Low₹2,532 / ₹1,255
- FY25 Full-Year Revenue₹557 Cr
- FY25 Full-Year PAT₹88.15 Cr
- Full-Year EPS (FY25)₹88.37
- Annualised EPS (Q3×4)₹62.28
- Book Value₹170
- Price to Book11.3x
- Dividend Yield0.24%
- Debt / Equity0.09x
- Return 1-Year14.8%
The Setup: Tanfac just reported Q3 FY26 revenue of ₹173 crore (+8% QoQ), but more importantly — they commissioned two massive solar-grade diluted HF plants in 2025, doubled their hydrofluoric acid capacity, and locked in ₹2,362 crore in long-term Japanese customer agreements. Meanwhile, the stock trades at 51x P/E in a sector where the median P/E is 13.98x. Either Tanfac is the next moonshot, or the market has literally forgotten to price in the capex risk. Given that their ROCE is 41.8% and profit has grown 68% YoY (FY25), we’re inclined to investigate.
02 — Introduction
What Does Tanfac Even Do? (And Why Is Your Solar Panel Obsessed With Their Acid?)
Tanfac Industries makes hydrofluoric acid and its derivatives. Yes, the same acid that’s used in solar wafer manufacturing, refrigerant gases, steel pickling, pharmaceuticals, and about 47 other things that nobody talks about at dinner parties.
Incorporated in 1972, Tanfac has spent the last five decades perfecting the art of making fluorine-based chemicals in a SIPCOT facility in Cuddalore, Tamil Nadu. They’ve got 60 acres, 700+ employees, and the kind of engineering DNA that comes from handling hazardous chemicals so sophisticated that a single contamination event would cost ₹10 crore. Their product portfolio reads like a chemistry textbook’s table of contents: Anhydrous Hydrofluoric Acid (AHF), Sulphuric Acid, Oleum, Aluminum Fluoride, Potassium Fluoride, Boron Trifluoride Complexes — basically, if it sounds like it could melt your face off, Tanfac probably makes it, bottles it, and sells it to the world.
In March 2022, Anupam Rasayan India (ARIL) acquired Aditya Birla Group’s stake and became co-promoter alongside Tamil Nadu Industrial Development Corporation (TIDCO). Suddenly, Tanfac had a pharma-grade sibling who knew how to scale. Fast forward to FY25: ₹557 crore revenue (+47% YoY), ₹88 crore PAT (+68% YoY), and a company that just proved it could execute a ₹100 crore HF expansion on time and on budget. In October 2024, they commissioned a second HF plant that doubled their AHF capacity from 14,850 MTPA to 29,700 MTPA. No fanfare. No press conference. Just “here’s your highest-ever capacity, now let’s make more money.”
Concall Insight (Feb 2026): Management disclosed that the company achieved highest-ever production and capacity utilization post-HF expansion. Two solar-grade DHF plants commissioned in June & October 2025. Both phases completed on internal accruals. The future? ₹495 crore plant for 20,000 MTPA refrigerant gas capacity, expected Q3FY27. Japan locked in for 7,500 MTPA for 7 years at ₹337.5 crore/year.
03 — The Business: Chemistry That Doesn’t Explain Itself
Why Nobody At Your Local Gym Talks About Hydrofluoric Acid, But Everyone Should
Tanfac’s business is deceptively simple: buy sulphur and fluorspar (or make them), process them into hydrofluoric acid, then deploy that HF into three strategic silos.
Silo 1 — Commodity Chemicals (70% of revenue): Sell HF, sulphuric acid, and oleum to fertilizer, petroleum refining, and basic chemical companies. High volume, moderate margin, India-focused. This is the bread-and-butter business that funds the innovation.
Silo 2 — Specialty Derivatives (now 20–25% of revenue): Process HF into aluminum fluoride, potassium fluoride, boron trifluoride, and other exotic compounds for aerospace, refrigeration, pharmaceuticals, and semiconductors. Lower volume, much higher margins, global customers.
Silo 3 — Solar Grade DHF (emerging, ~5% of revenue but 33% CAGR): In 2025, they commissioned India’s first solar-grade dilute HF plant. This is the punchline: as India builds out solar panel manufacturing capacity, Tanfac is the guy supplying the ultra-pure acid that etches the silicon wafers. They’ve locked in supply agreements with Kredence Electronics (₹732 crore for 3.5 years) and Krishna PV (₹336 crore for 3.5 years). That’s ₹1,068 crore in contracted revenue from a product that didn’t exist 18 months ago.
Domestic82%FY25 Revenue
Exports18%10+ Countries
Customers105+Global Footprint
Capacity Deep Dive: As of Dec 2025 (per investor presentation), Tanfac operates 135,000 MTPA total capacity: 30,000 MTPA AHF (doubled in Oct 2024), 20,000 MTPA Solar Grade DHF (two phases completed Jun-Oct 2025), 100,000 MTPA Sulphuric Acid, and 5,000 MTPA Specialty Fluorides. They’ve got zero idle capacity, which means every additional order is pure operating leverage.
04 — Financials Overview: When Growth Gets Weird
Q3 FY26: Revenue Up 8% QoQ, Profit Down 55% YoY. Wait, What?
Result type: Quarterly Results | Q3 FY26 EPS: ₹15.57 | Annualised EPS (Q3×4): ₹62.28 | Full-year FY25 EPS: ₹88.37
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 173 | 178 | 169 | -2.74% | +2.37% |
| Operating Profit | 26 | 50 | 27 | -48% | -3.7% |
| OPM % | 15% | 28% | 16% | -1,300 bps | -100 bps |
| PAT | 15.6 | 34.8 | 17.2 | -55.3% | -9.3% |
| EPS (₹) | 7.78 | 17.40 | 8.59 | -55.3% | -9.4% |
The Margin Collapse Explained (And Why It’s Not a Disaster): Q3 FY26 OPM fell from 28% to 15% YoY. Scary headline, right? Here’s what actually happened: in Q3 FY25, the company had just completed its solar-grade DHF buildout at low cost (~₹47 crore capex on internal accruals). Inventory was lean. Raw material costs were benign. Then in Q3 FY26, two things happened: (1) input material costs spiked (sulphur and fluorspar inflation globally), and (2) new capacity ramp-up typically sees inventory build and underutilization before hitting stride. Management’s own concall noted “margin pressure due to spurt in key input material costs.” The 9M FY26 EBITDA margin stands at 15.78% vs 24.18% in 9M FY25 — a significant compression driven by raw material inflation. BUT, look at 9M revenue: ₹518 crore, up 35% YoY. So Tanfac is selling more, just at lower per-unit margins due to input inflation. Normal operating rhythm in commodity-like chemicals. This is not insolvency risk; this is margin volatility.
05 — Valuation: The P/E Mystery
51x P/E. You Seeing This Right? Yes. Now Breathe.
Method 1: P/E Based (Earnings Normalization)
Current EPS quoted at ₹37.4 (TTM), but this is artificially depressed due to Q3 margin pressure from input inflation. Normalising FY25 PAT (₹88.15 Cr) to FY26 run-rate growth (35% revenue growth 9M FY26) suggests FY26 PAT of ~₹95–100 Cr. Normalised EPS ~₹48–50. At industry median P/E of 13.98x: fair value ₹670–700. At 25x P/E (growth premium): ₹1,200–1,250. Tanfac’s current P/E of 51x assumes FY27 profit growth of 80%+. Possible? Yes. Probable? TBD.
Range: ₹670 – ₹1,250 (Normalised Earnings Basis)
Method 2: EV/EBITDA Based
FY25 EBITDA = ₹129 Cr. Current EV = ₹3,817 Cr (market cap, near-zero net debt). EV/EBITDA = 29.5x. Industry median ~12–15x. At 15x (fair value multiple): EV = ₹1,935 Cr → Per share ₹971. At 20x (growth premium): ₹2,580 Cr → Per share ₹1,290. The current 29.5x implies the market is pricing in sustained 25–30% EBITDA growth for 5+ years.
At 12x–20x EBITDA multiples:
Range: ₹780 – ₹1,290
Method 3: DCF Based (Capacity Expansion Scenario)
Base FCF: ~₹70 Cr (FY25 operating CF minus capex). With solar DHF and refrigerant gas capacity ramping, assume 20% FCF growth for 5 years, then 5% terminal growth. WACC: 10%. → PV of 5-year FCFs: ~₹420 Cr. Terminal Value at 5% growth: ~₹2,500 Cr. Total EV: ~₹2,920 Cr (near-zero net debt). Per share: ₹1,460.
Range: ₹1,100 – ₹1,460 (DCF Bull Case)
Fair Min: ₹670
CMP: ₹1,913 | Median Fair Value: ₹1,050
Fair Max: ₹1,460
CMP ₹1,913
Conservative Fair Value ₹670–1,050
⚠️ EduInvesting Fair Value Range: ₹670 – ₹1,460. Current CMP of ₹1,913 sits at the upper edge of our valuation range, implying the market has already priced in significant capex execution and profit growth. This fair value range is for educational purposes only and is not investment advice. Consult a SEBI-registered investment advisor before making any financial decision.
06 — What’s Cooking: News, Triggers & The Capex Circus
When A Company Announces ₹495 Crore Capex Like It’s Ordering Coffee
