SRF Limited: Strong 1Q but the outlook is uncertain

Research evidence excerpt

SRF Limited: Strong 1Q but the outlook is uncertain

y in select products. 2) PFB was the key earnings driver, with revenue up 42% 03/28E 91.64 91.61 -0 88.72

YoY and EBIT margins expanding to 17.3% from 9.9%, aided by supply disruptions and 03/29E 114.70 112.51 -2 105.13

strong execution across geographies; however, management expects margins to

normalize from Q2 onwards. 3) Technical Textiles reported 28% YoY revenue growth, Shaleen Kumar

Analyst

with EBIT margins improving to 18.1% from 8.1%, benefiting from inventory gains and

shaleen.kumar@ubs.com

favorable demand-supply conditions, which are likely to moderate in the coming +91-22-6155 6065

quarters.

Raksha Saraf

Associate Analyst

Highlights from earnings call

raksha.saraf@ubs.com

1) Management maintained 15-20% Chemicals growth guidance for FY27 and +91-22-6155 6041

indicated Q1 performance positions the business towards the higher end of the guided

Angad Saluja

range. It did caution about 2Q being seasonally weak for ref gas; 2) As per Associate Analyst

Management, Specialty Chemicals is showing early green shoots, with a sequential angad.saluja@ubs.com

improvement in volumes and pricing in select products, although recovery remains +91-22-6155 6174

gradual; 3) The board approved Rs2.5bn capex for a 25,000 MTPA BOPET Thick Film

Line, expected to be commissioned over the next ~24 months; 4) Management remains

constructive on ref gas demand and pricing, while indicating PFB margins should

normalize from Q1 levels, albeit at a structurally higher base than historical levels.

Valuation: We have a Sell rating with a price target of Rs 2,300

Highlights (Rsm) 03/24 03/25 03/26 03/27E 03/28E 03/29E 03/30E 03/31E

Revenues 129,104 143,582 154,164 168,564 191,760 216,630 245,183 278,014