Buy SRF; target of Rs 3,650: Motilal Oswal

Motilal Oswal's research report on SRF

The Kigali Amendment categorizes countries into Non-Article 5 (developed nations) and Article 5 (developing nations, split into Group 1 and Group 2) with differentiated baseline periods and freeze years. For India (A5 Group 2), the baseline is the average of CY24-26 plus 65% of HCFC usage, with CY28 as the freeze year.

Outlook

Asia is expected to remain the key growth driver for HFC demand as developed nations transition to lower-GWP alternatives. With HCFC consumption concentrated in Asia, the region particularly India is poised for incremental growth, driven by the ongoing shift from HCFCs to HFCs and regulatory controls on trade. We expect SRF to post a CAGR of 16%/30%/42% in revenue/EBITDA/adjusted PAT over FY25-27. We reiterate BUY with our FY27 SoTP-based TP of INR 3,650.