SRF Ltd. share price target

SRF’s Q3FY23 print for chemical business (EBIT up 35% YoY) establishes its ability to drive strong growth despite challenging times, driven by balanced product mix and capacity expansion at an opportune time. It is now expanding fluorocarbon business with the addition of fluoropolymers, again, at the right time when cycle is about to turn favourable in this category.

SRF’s Q2FY23 print was mixed with chemicals business EBITDA holding up QoQ in a
seasonally weak quarter (up 2x YoY). Ref-gas and specialty business outperformed
our expectations and the management expects specialty segment revenue growth in
FY23 to exceed the guidance of >20%.

We had a meeting with the management of SRF during which we were briefed on its
ambitious journey involving a capex of Rs150bn over the next five years (vs Rs73bn in
the past five).