Broker’s Call: SRF (Buy)

The near-term margin outlook remains challenging amid elevated raw material, freight and energy costs and limited pass-through in specialty chemicals

Target: ₹2,800

CMP:₹2,309

SRF reported revenue/EBITDA/PAT growth of 35 per cent/22 per cent/31 per cent year on year, respectively. Revenue was in-line with our estimates; however, profitability came below our/consensus estimates, impacted by elevated input costs. Key highlights: Chemical business revenue was up 25 per cent, led by strong traction continued in the ref gas segment; PFB revenue was up 51 per cent, driven by sharp improvement in realisation on the back of raw material inflation; and technical textile business reported 26 per cent growth in revenue.

In the chemical business, the management re-iterated its FY27 revenue growth guidance of 15-20 per cent and, after 25 per cent growth in H1FY27, guided towards the upper end, aided by firm ref gas pricing and a pick-up in specialty chemicals volumes. However, the near-term margin outlook remains challenging amid elevated raw material, freight and energy costs and limited pass-through in specialty chemicals.

That said, long-term growth prospects remain intact, driven by fluoropolymer scale-up — PTFE value-added grades, PVDF, FEP/FKM and the Chemours project; the Odisha HFO plant; a widening pharma and agrochem pipeline; and a strategic focus on sunrise sectors. Considering H1FY27 performance, we have cut our FY27/FY28/ FY29 EPS estimates by -8 per cent/-5 per cent/-9 per cent respectively. Maintain BUY with a revised SoTP-based TP of ₹2,800 (earlier ₹3,060) on H1FY29 earnings (derived PE of 30x on H1FY29 EPS).

Published on October 23, 2026