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Buy SRF: Target Of Rs 5830: Sharekhan

Sharekhan is bullish on SRF recommended buy rating on the stock with a target price of Rs 5830 in its research report dated November 05, 2020.

Nov 11, 2020 / 11:37 AM IST
 
 
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Sharekhan's research repor on SRF


SRF Limited (SRF) posted robust Q2FY2021 result with better-than-expected revenue growth of 21% y-o-y (versus our estimate of 6%) to Rs. 2,101 core and sharp 641 bps beat in EBITDA margin at 28.2% (expectation of 21.8%). Chemical/packaging film business reported higher-than-expected revenue growth of 30%/26% y-o-y to Rs. 881 crore/Rs833 crore. Packaging EBIT margin was up 995 bps y-o-y to 29.6% and chemical EBIT margin stood at 19.8% (up 50 bps y-o-y; 724 bps q-o-q). The company is upbeat on strong growth in the specialty chemical business and has guided for 25% growth in FY2021E (versus earlier guidance of 20%-25%) and expects gradual recovery in fluorochemicals in H2FY2021. SRF’s capex intensity is focused on specialty chemical (50%-60% of the capex plan of Rs. 1,500 crore-1,800 crore over the next three years), which would result in sustainable double digit earnings growth and drive re-rating.


Outlook


Hence, we recommend Buy on SRF with a PT of Rs. 5,830.


For all recommendations report, click here


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Broker Research
first published: Nov 11, 2020 11:37 am

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