Buy SRF; target of Rs 3650: Motilal Oswal

Motilal Oswal's research report on SRF

SRF delivered a strong 2QFY26, with EBIT surging 55% YoY, fueled by a robust 96%/44% YoY jump in the chemicals/performance films & foil (PFF) businesses, despite ongoing global headwinds. However, the technical textiles business EBIT declined 41% YoY in 2Q. The chemical business (specialty chemicals and fluorochemicals segments) is expected to deliver a stronger 2H performance due to seasonality, new product traction, and a stable-to-better pricing outlook for refrigerants. The company expects its chemical revenue growth to surpass 20% in FY26. We broadly retain our FY26/FY27/FY28 EBITDA estimates and reiterate our BUY rating. We value the stock on an SoTP basis to arrive at our TP of INR3,650.

Outlook

We build in a revenue/EBITDA/Adj. PAT CAGR of 14%/24%/32% over FY25-28E. We broadly maintain our FY26/FY27/FY28 EBITDA estimates and reiterate our BUY rating. We value the stock on an SoTP basis to arrive at our TP of INR3,650.