SRF Ltd. share price target

Revenue for the quarter of Rs. 3570 crore was down 7% y-o-y and up 17% q-o-q. Chemical/ Technical textiles/packaging films segments grew 30%/8%/2% q-o-q and -14%/2%/9% y-o-y. Growth was affected due to the weak external environment in specialty chemicals and fluorochemicals.

Weak H1, recovery expected in H2FY24

SRF’s Q2FY24 print for its chemical business (EBIT down 32.8% YoY) was below our expectations – hurt by lower sales in ref-gas and weakness in specialty sales from destocking. Despite this, SRF expects some growth in specialty chemicals revenue for FY24 and anticipates revival in ref-gas revenue in H2FY24E, as it has started to contract volumes in US for CY24 HFC quota.

Weak earnings; recovery expected in H2FY24

SRF’s Q1FY24 print for its chemical business (EBIT down 11.6% YoY) was below our expectations and was hurt from lower sales in ref-gas (both volume and price declined) while specialty sales were hurt from destocking. Company anticipates specialty chemicals sales to be impacted over the next few quarters though it has not seen any order cancellation, which implies steady underlying demand.