Accumulate SRF; target of Rs 1050: Emkay

Emkay's research report on SRF

Standalone revenue for the quarter at Rs 8.6bn was down 3%yoy, marginally lower than our estimates on the back of lower than estimated packaging films business revenues

Standalone EBITDA at Rs 1.4bn was up 15.7%yoy though lower than our estimates of Rs 1.7bn impacted by one offs (Rs 200mn including inventory loss and Dymel acquisition cost) and lower than estimated margins for the specialty chemical business

Performance for international subsidiaries improved significantly with Thailand packaging film plant operating at ~90% utilization and South African plant operating at 70% utilization. The overseas subsidiary losses for FY15 stood at Rs 50mn as compared to loss of Rs 550mn. Capex guidance of Rs 2-3bn remains intact.

"Specialty chemical business revenue growth for FY15 was broadly in-line with management’s expectation (just shy of 50%yoy mark). The management continued to guide for similar growth number on the back of ramp up in operations from recently commissioned capacities and visibility on addition of new molecules. We continue to remain positive on the specialty chemical business and maintain our target price of Rs 1,050 though have reduced our rating from Buy to Accumulate", says Emkay Global Financial Services research report.

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