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SRF Q4 Results: Management says chemicals recovery to continue but stock turns negative for 2024
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
SRF’s Chemicals business reported a 14% year-on-year decline in overall revenue to ₹1,816 crore.
SRF Ltd., management said that the company’s core chemicals business saw “reasonable recovery” in the chemicals business during the March quarter and expects this recovery to pick-up pace during the second half of the current financial year.
SRF’s Chemicals business reported a 14% year-on-year decline in overall revenue to ₹1,816 crore. Operating profit of the business also declined by a third from the year-ago period.
“During the quarter, the specialty chemicals business continued to face headwinds due to inventory realisation by certain key customers, while performing better than Q3,” the company said in a press release. The management also attributed further pricing pressure on intermediate products due to capacity additions in China.
SRF shares were under pressure through Tuesday’s trading session after peer Gujarat Fluorochemicals said that it expects the fluorochemicals business in financial year 2025 will either remain flat or soften a little.
The company’s own fluorochemicals business was hit due to Chinese dumping of refrigerants in India and the international markets, which led to pricing pressure and hit volumes.
For the March quarter, SRF reported a net profit of ₹422 crore, which was in-line with the ₹439 crore estimate. On a year-on-year basis, SRF’s net profit fell by 25%.
Revenue for the quarter fell 5.5% from last year to ₹3,570 crore, but was marginally higher than the estimate of ₹3,538 crore.
Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) for the period also fell by 25% to ₹696 crore, missing the ₹779 crore estimate.
Margin fell 510 basis points from last year to 19.5%, and missed expectations by 240 basis points.
Packaging films business saw revenue increase by 3% during the quarter to ₹1,153 crore, even as the business faced strong headwinds with significant margin pressures.
“However, we believe that as demand pivots towards global suppliers with multi-locational facilities, we remain cautiously optimistic about the prospects of this business in the medium-term,” the company said.
SRF’s technical textiles business grew by 9% from last year, while coated fabrics reported its highest-ever sales during the quarter.
Shares of SRF extended losses post the earnings announcement, ending at the day’s low, down 7.25% at ₹2,400. With Tuesday’s drop, the stock gave up all the gains of 2024 and turns negative.
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