Buy SRF: target of Rs 6760: Sharekhan

Sharekhan's research report on SRF

SRF Limited (SRF) is poised for a strong earnings cycle, led by continuous capex in specialty chemical (expected to grow at 20% for the next couple of years), cyclical recovery in refrigerants, and strong momentum in the packaging films segment. We believe calibrated expansion in the right space (chemicals) provides strong capacities for sustainable high growth (even beyond FY2023) and would drive further valuation re-rating for SRF. Higher margins in the packaging business and steady double-digit growth in specialty chemical would help SRF to post strong 68% y-o-y growth in PAT to Rs. 317 crore in Q3FY2021.

Outlook

We maintain our Buy rating on SRF with a revised PT of Rs. 6,760 (to reflect higher valuation multiple given our expectation of superior earnings growth and strong balance sheet. SRF is our top pick in the specialty chemical space.

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