Neutral SRF; target of Rs 2,100: Motilal Oswal

Motilal Oswal recommended accumulate rating on SRF with a target price of Rs 2,100 in its research report dated May 09, 2024.

Broker Research

May 14, 2024 / 14:45 IST

Neutral

26 Aug, 2025 12:21

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Motilal Oswal's research report on SRF

We slightly raise our earnings estimates by 3%/2% for FY25/FY26, factoring in a healthy pace of launches in the US generics segment and robust execution in the animal health segment, partially offset by higher R&D spending. We value ALPM at 23x 12M forward earnings to arrive at TP of INR 960. We expect a 13% earnings CAGR over FY24-26, led by a 10% sales CAGR in both DF/US segments and improved operating leverage (160bp margin expansion over FY24-26). ALPM continues to build its product pipeline for injectables, ophthalmics and inhalation segments for the US market with a sound compliance track record. The company focuses on improving MR productivity in the DF segment. We believe the current valuation adequately factors in the upside in earnings. Hence, we maintain our Neutral rating on the stock.

Outlook

The chemicals business (fluorochemicals and specialty chemicals) is expected to witness major improvement from 2HFY25 onwards. The packaging business is expected to remain under pressure in the medium term. Factoring in the sub-par performance of the chemicals and packaging businesses in 4QFY24 and the weak medium-term outlook, we reduce our FY25/FY26E EBITDA by 12%/10%. We value the stock on an SoTP-basis to arrive at our TP of INR 2,100. Reiterate NEUTRAL.

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