SRF Q2 Results: Profit Falls 33%, Misses Estimates

SRF Ltd.'s net profit declined 33% in the second quarter of fiscal 2025, missing analysts' estimates.

The chemical manufacturer's net profit stood at Rs 201 crore in the quarter ended Sept. 30, 2024, according to an exchange filing on Tuesday. That compares with the Rs 285-crore consensus estimate of analysts tracked by Bloomberg.

• Revenue up 8% at Rs 3,424 crore (Bloomberg estimate: Rs 3,483 crore).

• Ebitda down 14% at Rs 538 crore. (Bloomberg estimate: Rs 631 crore).

• Ebitda margin at 15.7% versus 19.7% (Bloomberg estimate: 18.10%).

• Net profit down 33% at Rs 201 crore (Bloomberg estimate: Rs 285 crore).

“While the performance this quarter has been expectedly subdued, I believe the worst is now behind us. We will start seeing an improvement from this quarter onwards, with a likelihood of a strong finish to the year," said Chairman and Managing Director, Ashish Bharat Ram.

• The chemicals business reported a decrease of 5% in its segment revenue from Rs 1,426 crore to Rs 1,358 crore during the second quarter, over previous year.

• The operating profit of the chemicals business decreased 29% from Rs 348 crore to Rs 246 crore.

• During the quarter, the specialty chemicals business experienced traction on certain new products, while volumes of some key products witnessed lower offtake due to inventory issues at the customers’ end.

• Overall, the order book remains strong for second half of the year, and a better performance is anticipated.

• The fluorochemicals business saw healthy performance in the domestic market, with an increase in overall volumes. However, reduced export realisations put pressure on margins.

• The H2 performance of the fluorochemicals business is expected to be better, as volumes in export markets ramp-up and the domestic season kicks-in.

• The packaging films business reported an increase of 27% in its segment revenue from Rs 1,122 crore to Rs 1,421 crore during the second quarter, compared with previous year.

• The operating profit of the business increased 7% from Rs 77 crore to Rs 83 crore, over previous year.

• This quarter, BOPET film margins improved somewhat in India, leading to better results for the Packaging Films Business, whereas Thailand continued to be affected by Chinese dumping.

• The performance of the BOPP film segment was in line with expectations.

• The technical textiles business reported an increase of 6% in its segment revenue from Rs 506 crore to Rs 536 crore during the second quarter.

• The operating profit decreased 5% from Rs 75 crore to Rs 71 crore.

• During the quarter, the business performed well owing to higher sales volume of its flagship Nylon Tyre Cord Fabric.

• Additionally, the business witnessed healthy demand for its polyester yarn segment, while the belting fabrics segment witnessed low demand and margins, which had some impact on the overall performance.

The other businesses reported a decrease of 11% in its segment revenue to Rs 113 crore in the second quarter, when compared with Rs 127 crore in the previous year. The operating profit of the other businesses decreased 48% from Rs 33 crore to Rs 17 crore in Q2FY25. During the quarter, the coated and laminated fabrics segments performed in line with the expectations

The board has approved a project to establish production facilities for fourth generation refrigerants, which have a notably lower Global Warming Potential and carbon footprint, at an estimated cost of Rs 1,100 crore. The project is anticipated to be completed in about 30 months.

The board has also approved a project to establish a manufacturing facility for the BOPP-BOPE film line in Indore, India. This project provides the company with an opportunity to expand current substrate, BOPP, and venture into a new substrate, BOPE. Additionally, it aligns with its sustainability agenda, as polyolefin substrates like BOPP/BOPE are considered more sustainable due to their mono-family advantage and ease of recyclability. The projected cost for this project is Rs 445 crore, and it is expected to be operational in approximately 25 months.

Shares of SRF fell 4.4% at Rs 2,176 apiece, as compared with a 1.26% decline in the benchmark NSE Nifty 50.