Please refer to important disclosures at the end of this report
SRF Ltd is engaged in manufacturing of chemicals and polymers, technical
textiles and packaging films. SRF continues to exhibit superior performance
across segments, except specialty chemicals which is going through a
transitory phase. Management expects a turnaround in the specialty chemical
business from Q4FY18 and expect the division to return to the high growth
trajectory from FY19 onward. Due to its focus on value added products, the
company has exhibited strong margins when most other players in the
industry are witnessing a sharp decline in margins. The Board has also
approved setting up of an integrated facility to produce HFCs at an estimated
cost of `356cr which entails acquisition, setting-up and the conversion of
capacities of HFC, with an aim of doubling existing HFC capacities. This cost
would be inclusive of the cost with respect to the acquisition of HFC assets
from Mexichem for US$10mn. Part of this capex would also used to set up a
new R32 plant with a capacity of 7000-8000 MTPA, R134a capacity
debottlenecking at Dahej and reconverting the R32 facility at Bhiwadi to
R134a. It has reported top line and bottom line growth of 4% & 7% over last
5 years respectively. SRF raw material cost to revenue has declined from
57.35%in FY12 to 49.65% in FY17 and cash flows have improved from
`422.7cr in FY13 to `645.44cr in FY17.The company debt equity ratio has
also reduced from 1.07x in FY15 to 0.83x in FY17. The company has RoE of
13.96% TTM earning and is currently trading at PE valuation of 26x FY17
earnings. Hence Buy.
CMP `2005
Reuters Code
BSE Sensex
Face Value (`)
Market Cap (` cr)
52 Week High / Low
Avg. Daily Volume
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Others | Textiles
Jan 15, 2018
SRF |Textiles
June 5, 2017
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Disclosure of Interest Statement SRF
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)