SRF Ltd. share price target

SRFs 3QFY17 revenues were muted at Rs 11.3bn ( 3% YoY) led by a decline in its specialty biz. Lower margins (PBITM 16% vs. 26%) negated the strong results in the Technical Textile and Packaging segments. EBITDA was at Rs 2.3bn (-1%). Lower interest cost/tax rate boosted PAT to Rs 1.0bn ( 8%). We expect this muted outlook to continue in the near term.

Specialty Chemicals Slowdown Continues

SRFs 2QFY17 revenues were at Rs 11.4bn (-2% YoY) led by lower realisation. EBITDA margin declined to 20.3% (-102bps) owing to weakness in specialty segment. Consequently, EBITDA was at Rs 2.3bn (-6%). However, higher other income, lower interest cost and tax rate boosted APAT to Rs 1.2bn ( 17%).

We expect SRF's pharmaceuticals business to boost growth of specialty chemicals in 2HFY17, driven by the commencement of commercial production of new molecules at its multi-purpose plant. The company also has 10-20 molecules under R&D; and is optimistic about commercializing them in future. On the other hand, slowdown in its agrichem business (accounting for almost 75% of revenues) globally continues to impact the specialty chemicals business. Thus, we expect growth in specialty chemicals to be lower than its historical run-rate, but maintain...

Key highlights: Reported flat yoy sales and that was 3% below our estimates. Chemicals & Polymers business grew 3% yoy. TTB/PFB saw 6%/5% yoy decline in sales but they saw sequential recovery 17%/16% respectively. Improved operating performance across all three segments resulted in 220bps positive surprise in EBITDA margin at 23.3% (vs. estimated 21.1%), resulting in 6% yoy rise in EBITDA to Rs 2.84 bn (vs. estimated Rs 2.65bn). The maThe core PAT (adjusted for Fx gain of Rs 63mn) at Rs 1.38bn reported 12% yoy growth and that was 11% ahead of our estimates.Phillip Capital are positive on the incremental capex towards CPB, their staggered earning implications and limited visible stock upside make them downgrade their rating on SRF to NEUTRAL from Buy with the pre?fixed TP of Rs 1600.

Trendlyne has 7 reports on SRF updated in the last year from 3 brokers with an average target of Rs 1638.3. Brokers have a rating for SRF with 1 downgrade,2 price downgrades and 1 price upgrade in past 6 months.

EBITDA in line but PAT exceeds estimates: SRF’s consolidated revenues were flat YoY at INR12.2b (est. of INR13.2b). Chemicals business (CB) continued its slow growth trajectory of 11.5% YoY, while Technical Textiles (TTB) and Packaging (PB) declined 5.6% and 5.2%, respectively, due to lower realizations. EBITDA margins expanded to 23.3% in 1QFY17 from 21.8% in 1QFY16, driven by margin expansion across the chemicals and technical textile businesses. Accordingly, adj. PAT grew robustly by 24% YoY to INR1,395m (est. of INR1,317m) in 1QFY17.

9 Healthy performance in Chemicals & polymers business (+36% yoy) led by strong refrigerant gas R134 sales. Technical textile (TTB) sales were lower by 18% yoy and packagingfilmbusiness(PFB)wasflatyoy....

By leveraging its unique experience of >25 years in handling fluorine chemistry, SRF has alreadyestablisheditselfasoneoftheleadingplayersoffluorospecialtyintheworld.Rising applicationoffluorospecialtycompoundsinpharma/agroduetocertainkeypropertieshave...

In our recent interaction, the management indicated two new client wins in the Agrochemicals part of the Specialty Chemicals business. These are US-based global agrochemical giants, who would not only contribute to...

SRF reported strong results with EBITDA growing at 25% YoY to Rs 2.3bn and PAT at Rs 1.0bn ( 41%). The performance was led by robust growth in specialty chemicals and strong margins in the packaging films division.