- 24 Jul 2024
- ICICI Securities
SRF Q1FY25- REVENUES STABLE BUT PROFITABILITY HURTS DUE TO ADVERSE PRODUCT MIX
SRF - 3029 Change: 38.90 (1.30 %)News: Revenues grew 3% YoY to ₹ 3402 crore driven by 22% growth in Packaging films (39% of sales) to ₹ 1336 crore and 15% growth in Technical textiles (15% of sales) to ₹ 525 crore. The flagship Chemicals business (43% of sales), however de-grew 11% to ₹ 1482 crore, due to weakness in both Specialty chemicals and Fluorochemicals. EBITDA declined 13% YoY to ₹ 603 crore and margins stood at 17.4% (230 bps decline) as there was significant drop in the EBIT of chemicals business which overshadowed EBIT improvement in packaging films and technical textiles businesses. PAT declined 30% YoY to ₹ 252 crore.
Views: The specialty Chemicals segment faced headwinds as the agrochemicals segment was sluggish due to inventory rationalization by certain key customers. The performance of the Fluorochemicals sub-segment was affected due to low margin in the Chloromethanes segment even as the domestic refrigerant gases business improved during the quarter. The Technical textiles sales were boosted by Tyre Cord Dipped Fabrics while the Packaging films’ performance was boosted by BOPP films. For SRF the performance and the investors sentiment hinges upon the performance of Chemicals business, the other two being commoditised segments. The management expects recovery in the Specialty and Fluorochemicals subsegments from H2FY25 onwards. The expansion phase is continuing though, with the commissioning of the PTFE facility, Aluminum Foil facility and HFC expansion.
Impact: Negative