SRF Q2 Results Review - Recovery Delayed As Uncertainties Persist: Dolat Capital

Dolat Capital Report

SRF Ltd.'s chemicals reported Ebit margin of 18.1% (-625 basis points YoY/-255 bps QoQ) due to volume/pricing issues in some key specialty chemical molecules and R-gas exports, resulting in weak overall Q2 FY25 performance with Ebitda/PAT at Rs 5.4 billion/2.0 billion (below estimates).

Management remains confident of revival in H2 FY25 on the back of healthy order book for specialty chemicals with traction seen in new products and order execution to improve progressively over next couple of quarters.

However, it refrained from giving any revenue or margin guidance (previously ~20% growth for chemicals segment with Ebit margins of ~24%).

We cut our FY25/FY26E Ebitda estimates by 8%/5% as we factor-

1. lower margin across specialty and fluoro chemicals and

2. gradual ramp-up in new projects.

Maintain ‘Accumulate’ rating with SoTPbased revised target price of Rs 2520 (earlier Rs 2460) as we roll to Dec-26.

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