SRF Q3 Results: Profit Falls 50%, Misses Estimates

SRF Ltd.'s net profit decreased 50% in the third quarter of fiscal 2024.

The specialty chemical manufacturer's profit dropped to Rs 253 crore in the October-December quarter, in comparison with Rs 510.9 crore in the year-ago period, according to its exchange filing. That compares with the Rs 332-crore consensus estimate of analysts tracked by Bloomberg.

• Revenue down 12.01% at Rs 3,053.04 crore vs Rs 3,469.66 crore (Bloomberg estimate: Rs 3,190 crore).

• Ebitda falls 32.11% to Rs 565.83 crore vs Rs 833.52 crore (Bloomberg estimate: Rs 654 crore).

• Margin down 548 bps at 18.53% vs 24.02% (Bloomberg estimate: 20.5%).

• Net profit down 50.39% at Rs 253.43 crore vs Rs 510.9 crore (Bloomberg estimate: Rs 332 crore).

The chemicals business reported a decrease of 21% in its segment revenue from Rs 1,757 crore to Rs 1,394 crore during Q3 FY24 over the corresponding period last year. The operating profit decreased 43% from Rs 564 crore to Rs 322 crore.

During the quarter, the specialty chemicals business continued to face headwinds due to inventory rationalisation by certain key customers, while performing better than Q2. The performance of the fluorochemicals business was adversely impacted owing to seasonally low demand for refrigerants.

In addition, sluggish growth in the agrochemical and pharmaceutical industries adversely impacted the demand for some key industrial chemicals.

The company commissioned the PTFE facility and the HFC expansion project during the quarter.

It reported a decrease of 9% in its segment revenue from Rs 1,203 crore to Rs1,091 crore during Q3 as against the same period last year. The operating profit declined 62% from Rs 119 crore to Rs 45 crore.

During the quarter, the performance was adversely impacted on account of substantial supply addition in both BOPET and BOPP film segments, resulting in significant pressure on margin and an overall demand slowdown globally.

The Technical Textiles Business reported an increase of 8% in segment revenue from Rs 426 crore to Rs 458 crore during Q3. The operating profit increased 101% from Rs 34 crore to Rs 69 crore as compared with the same quarter last year.

During the quarter, the segment performed well owing to healthy domestic demand for its flagship Nylon Tyre Cord Fabric, despite the company's facility in Manali being adversely impacted due to Cyclone Michaung.

Demand for belting fabrics and polyester yarn remained strong.

The Other Businesses reported an increase of 23% in segment revenue from Rs 92 crore to Rs 114 crore as compared with the same period last year. The operating profit increased 132% from Rs 9 crore to Rs 21 crore.

During the quarter, the coated fabrics segment performed well because of strong domestic sales driven by healthy demand for products. The laminated fabrics segment also performed in line with expectations.

Shares of SRF closed 0.84% lower at Rs 2,227.75 apiece before the results were announced, as compared with a decline of 0.99% in the benchmark NSE Nifty 50.