SRF Stock Hits A Record High After Q2 Results
Shares of SRF Ltd. jumped to a record high after the chemical-based industrial intermediates maker saw its quarterly profit surge, aided by its packaging films and specialty chemicals business.
Net profit of the company rose 57% year-on-year to Rs 315.2 crore in the July-September period, according to an exchange filing. That compares with the Rs 200-crore consensus forecast of analysts tracked by Bloomberg.
Other highlights (year-on-year)
- Revenue rose 20.9% to Rs 2,100.8 crore, higher than the Rs 1,839-crore estimate.
- Operating profit, or earnings before interest tax, depreciation and amortisation, surged 73% to Rs 572.5 crore.
- Lower raw material costs and other expenses helped margin expand more than 800 basis points to Rs 27.3%.
“The specialty chemicals business reported a robust performance on the back of higher capacity utilisation of dedicated and multipurpose plants, leading to better operating leverage and expansion of overall margins,” the company said in a post-earnings release. Revenue for the segment rose 30% year-on-year to Rs 881 crore.
The packaging films business, too, reported a 26% year-on-year growth in revenue to Rs 833 crore, aided by a sustained focus on sale of value-added products and commissioning of new film capacities for BOPET—a polyester film used for packaged foods, solar power cells, touch-screen panels of mobile phones and flat screen televisions—in Thailand and Hungary.
- Sale of fluorochemicals business remained muted, owing to weak demand for refrigerants from automobile and air-conditioning segments and low prices of refrigerants globally.
- Revenue for the technical textiles business rose 3% to Rs 332 crore. The operating profit for the segment jumped more than twofold over the year earlier to Rs 50 crore, owing to faster-than-expected recovery in the domestic tyre industry.
The company, according to a separate release, has approved expanding its capacity by setting up a second BOPP film line and metallizer at Indore, either directly or through a wholly-owned subsidiary.
It proposes to add capacity of 60,000 million tonnes per annum over the next 20 months to cater to growth of the market for BOPP—a flexible film used to pack electrical adhesives, electrical applications, printing and lamination—in India and overseas.
The proposed new capacity addition will require a cost of Rs 424 crore. The funding will be done through a mix of debt and internal accruals, the company said.
Besides, SRF will set up a dedicated facility to produce 200 million tonnes of P16 specialty product at Dahej for Rs 17.5 crore.
Shares of SRF gained as much as 3.9% to Rs 4,614.5 apiece, compared with a 1.26% gain in the Nifty 50 Index. The stock is up for the second straight day. Of the 25 analysts tracking SRF, 21 have a ‘buy’ rating, three have a ‘hold’, while IIFL suggests ‘reduce’. The average of Bloomberg consensus 12-month target prices implies an upside of 7.1%.