Motilal Oswal's research report on SRF
In FY25, EBITDA grew ~7% YoY to INR28.3b, driven by growth in Chemicals (up 5%) and Performance Films & Foils (PFF) (up 45%), while Technical Textiles (TTB) saw a decline (down ~8%). Although its margin performance remained mixed across segments, SRF achieved a healthy recovery in all businesses. Capex at ~INR11b was lower than the company’s initial guidance of INR22-23b. The chemicals business continued to be the largest part of the capex (~62%). In FY26, SRF plans to increase capex intensity and has guided for capex of INR22-23b. SRF’s moat lies in its technological innovation and advancement to meet evolving customer needs and maintain a leadership position. Its R&D spending has increased at ~11% CAGR over the last decade, with INR1.5b spent in FY25 — around 5.4% of EBITDA.
Outlook
We expect SRF to clock a CAGR of 12%/15%/16% in revenue/EBITDA/adj. PAT over FY25-27. We reiterate our BUY rating on the stock with our SoTP-based TP of INR3,700, owing to its rich valuations.
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