Sharekhan's research report on SRF
SRF’s management has guided for five-year capex plan of Rs. 15,000 crore (~83% or Rs. 12,500 crore to be spent on chemical) and indicated import substitution in fluoropolymers and industrial chemical to drive growth. Management sounded confident of sustaining 20%+ revenue growth/ROCE in specialty chemical. SRF targets to take pharma revenue to 20-25% in the next five years versus 14-15% currently. Management sees growth opportunities in fluoropolymers, given import substitution opportunity and global customers looking for alternative suppliers. SRF’s PTFE plant (completion expected by Q3FY23) would focus on substituting PTFE imports in India. Management reiterated its outlook for the packaging film business and believes BOPP and VAP should somewhat help negate the margin decline in BOPET. Technical textile would see small capex of Rs. 162 crore to expand belting fabric capacity by 63% to 1800 metric tonne per month.
Outlook
We maintain Buy on SRF with a revised PT of Rs. 2,960, as strong capex plan and China plus one strategy would continue to drive sustained strong earnings growth. At the CMP, the stock trades at 34.1x/28.6x its FY2023E/FY2024E EPS.
More Info
At 14:29 hrs SRF was quoting at Rs 2,663.00, up Rs 118.40, or 4.65 percent.
It has touched an intraday high of Rs 2,683.45 and an intraday low of Rs 2,523.40.
It was trading with volumes of 71,073 shares, compared to its thirty day average of 33,155 shares, an increase of 114.37 percent.
In the previous trading session, the share closed up 5.22 percent or Rs 126.30 at Rs 2,544.60.
The share touched its 52-week high Rs 2,773.00 and 52-week low Rs 1,881.55 on 08 April, 2022 and 30 August, 2021, respectively.
Currently, it is trading 3.97 percent below its 52-week high and 41.53 percent above its 52-week low.
Market capitalisation stands at Rs 78,937.93 crore.
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