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- 04 Nov 2022
- ICICIdirect Research
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SRF REPORTS MIXED SETS OF NUMBERS
SRF - 2299 Change: -37.65 (-1.61 %)News:
SRF reported topline growth of 31% YoY to Rs 3728 crore against our expectation of Rs 3858.2 crore led by decent performance of the specialty chemical segment. Revenue from specialty chemical was up 62% YoY to Rs 1830.2 crore while the same from technical textile declined 16% YoY to Rs 466.2 crore. The revenue from packaging film and other segments was at Rs 1331 crore (up 24%) and Rs 100.4 crore (up 16% YoY), respectively. OPM for the quarter declined 310 bps YoY to 20.6% resulting in EBITDA growth of 14% YoY to Rs 769.1 crore against our estimate of Rs 1006.9 crore. The contraction in operational performance was on account of lower gross margins (47.6% vs. 49.6% in Q2FY22). OPM from chemical segment remained at 30.6% (+350 bps YoY) while the same from technical textile, packaging film and other segments was at 15.4% (-1270 bps YoY), 9.6% (-1060 bps YoY) & 8% (-4 bps YoY), respectively. PAT was at Rs481 crore vs. our estimates of Rs 628.6 crore (up 26% YoY). Depreciation and finance cost were at Rs 139.3 crore (+7% QoQ) and Rs 44.5 crore (+37% QoQ), respectively, while other income grew immensely by 232% QoQ to Rs 32.7 crore
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The management plan for capex of Rs 12,500 crore in the next five years towards specialty chemicals keeping in mind higher consumption of fluoro-compounds across agrochemical and pharma to drive growth ahead. Moreover, commissioning of PTFE plant in December 2022 with capacity 5000 tpa will drive margins ahead. In packaging segment investment of Rs 425 crore in aluminum foil carrying capacity 21000 MTPA and asset turnover of 1.75-2x will lead to better growth in coming years. Prudent and measured strategy to increase presence across other fluoropolymers like PVDF, FEP, PFA etc. to enhance visibility over medium to long term
Impact:
Neutral