Buy SRF; target of Rs 2408: Motilal Oswal

Motilal Oswal's research report on SRF

SRF’s revenue increased 48.9% YoY to INR19,154m (our estimate: INR15,073m) in 2QFY19. EBITDA grew 63% YoY to INR3,327m (our estimate: INR2,715m), with the margin expanding 160bp YoY to 17.4% (our estimate: 18%). Adj. PAT increased 71.6% YoY to INR1,653m (our estimate: INR1,127m). 1HFY19 performance: Revenue grew 42% YoY to INR36,566m. EBITDA increased 56% YoY to INR6,440, with the margin expanding 160bp YoY. Adj. PAT grew 49% YoY to INR2,992m. For 2HFY19, we expect revenue growth of 31% YoY, with margin expansion of 130bp YoY.

Outlook

We expect 25%/35% revenue/PAT CAGR over FY18-20. Our TP of INR2,408 implies 23% upside. Maintain Buy.

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