Hold SRF; target of Rs 2156: Prabhudas Lilladher

Hold

Prabhudas Lilladher's research report on SRF

SRF reported weak performance with Revenue/EBITDA/PAT decline of 15%/19%/37% YoY & 5%/10%/16% QoQ amid drop in core business segments such as chemicals & packaging films. The company may witness near term headwinds across businesses due to subdued demand across agrochemicals and supply glut in packaging films business. However, management guided specialty chemicals to give better returns with commercialisation of PTFE, R32 and newer products. Furthermore, the board approved projects for setting up manufacturing facility (BOPP Film) and new dedicated facility to produce an agrochemical intermediate at projected cost of Rs 2.75bn & Rs 2.35bn in Indore & Dahej respectively.

Outlook

We expect Revenue/EBITDA/PAT CAGR of 6%/6%/2% over FY23-FY26E. Maintain ‘Hold’ rating with SOTP based TP revised to Rs2156 (Rs2143 earlier; implied consol FY25E EV/EBITDA of 11x and PE of 25x).

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SRF - 30 - 10-2023 - prabhu