SRF Ltd. share price target

SRF Ltd's (SRF) Q3FY20 results was characterised by solid growth in the Chemicals Business (CB) as well as stable performance from the Packaging Films Business (PFB).

Steady Operating Performance on Healthy Chemical Biz SRF has delivered a steady operating performance in 3QFY20 largely on the back of healthy chemicals business. EBITDA grew by 25% YoY to Rs3.90bn (vs. our estimate of Rs3.85bn), while EBITDA margin rose by 384bps YoY to 21.1% (vs. our estimate of 19.2%). However, its revenue grew by only 2% YoY to Rs18.5bn vs. our estimate of Rs20.1bn. PBT grew by 40% YoY to Rs2.6bn (vs. our estimate ofRs2.4bn). Net profit increased by 125% YoY to Rs3.5bn primarily on account of lower...

SRFs Chemicals business maintained its revenue momentum with >25% growth for the seventh consecutive quarter, driving the companys overall performance. We expect large part of growth in FY21 to be driven by Chemicals with commissioning of HFC capacity and sustained momentum in Revenue came in 10% below our estimate, whereas EBITDA exceeded our estimate by 4%. Packaging Film revenue declined 9% YoY to INR6.4b, with the margin expanding 10.9pp YoY to 23.4% led by improved efficiencies, expanded product offerings and a higher contribution from value-added products. The board approved a proposal to set up dedicated facilities to produce intermediates catering to the agro-chemicals segment at an aggregate cost INR2.4b for new products and ramping up existing products (2,150 MTPA). The segment delivered a subdued performance owing to the slowdown in the auto sector and a drop in global prices of refrigerants on account of weak demand and the normalization of chloromethane product prices from peak.

SRF Ltd's (SRF) Q2FY20 results were primarily driven by the Chemicals Business (CB) which recorded robust revenue growth and margin expansion during the quarter.

SRF has delivered a steady operating performance in 2QFY20 largely on the back of healthy chemicals business. EBITDA grew by 5.6% YoY to Rs3.35bn (vs. our estimate of Rs3.62bn), while EBITDA margin rose by 120bps YoY to 19.3% (vs. our estimate of 17.8%). Adjusting for a one-off expense of Rs288mn (pertaining to stamp duty paid related to tyre cord division in MP), its EBITDA grew by 14.7% YoY to Rs3.64bn, while margin expanded by 280bps to 20.9%. However, its revenue fell by 1% YoY to Rs17.38bn vs. Our estimate of Rs20.35bn. PAT grew by 40.5% YoY to Rs2.05bn (vs. our estimate ofRs1.82bn) primarily on account of lower tax rate of 2% (vs. 22.6%...

YoY to INR3.4b; adjusted for stamp duty of INR288m, it stood at INR3.6b (inline). Adj. PAT grew 41% YoY to INR2,051m. For 1HFY20, revenue/EBITDA/PAT were up 2%/7%/26% YoY. Yet another quarter of strong performance by Chemicals: Chemicals revenue grew 25% YoY to INR6.8b, with margin expansion of 770bp YoY to 19.3%. Capex of INR400m for Specialty Chemicals has been approved. Packaging film revenue declined 5% YoY to INR6.6b, with margin expansion of 230bp YoY to 19.6%. The company plans incur capex of USD50m toward a BOPP plant in Thailand. Technical Textiles revenue declined by a significant...

SRF Ltd's (SRF) Q1FY20 results were primarily driven by the Packaging Films Business (PFB), while the other two lines of businesses were impacted by headwinds viz.

Better-than-expected performance: Revenue grew 9% YoY to INR18.3b (our estimate: INR16.8b) in 1QFY20, driven by Chemicals segment (+26% YoY to INR6b). EBITDA increased 10% YoY to INR3.5b (our estimate: INR2.8b), with the margin improving 20bp YoY to 19.2% (our estimate: 16.4%). Adj. PAT was up 18% YoY to INR1.7b (our estimate: INR986m). We note that SRF reported a beat on all fronts as (a) Packaging Film segment outperformed and (b) impact from Dahej plant shutdown was not as severe as expected. Technical Textiles disappoints: Chemical revenue increased 26% YoY to...

SRF Ltd (SRF) posted a strong set of numbers in Q4FY19, particularly in their Chemicals Business (CB).

FY19 performance: Revenue grew 38%, with the margin expanding 170bp to 17.9%. Adj. PAT increased 60.2%. Chemicals/Packaging compensate for drag from Technical Textiles: The Technical Textile margin shrank 270bp YoY to 11.7% in the quarter owing to an inventory loss (INR50-100m) due to RM price volatility and lower sales volumes due to sluggishness in the auto sector. However, this adverse impact was offset by the Chemicals/Packaging segments, where revenue grew 65.8%/18.3% YoY and margins expanded 160bp (to 19.8%)/330bp (to...