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Shares of SRF recovered around 8% from the day's lows on Thursday, October 22, after the company expressed confidence in delivering the upper end of its FY27 guidance for the chemicals business in its earnings conference call.
The company had earlier guided for 15-20% growth in its chemicals business. Management also expects stable demand and pricing in the refrigerants business, while highlighting a recovery in agrochemical volumes in certain markets.
The stock had fallen as much as 6.5% on Wednesday, October 21, after SRF's September-quarter earnings missed analyst expectations on the operating front, despite reporting year-on-year growth in revenue and net profit.
Chemicals business: New plants on track, revenue scale-up expected by FY29
SRF said its two Chemours plants remain on track, with the first expected to be commissioned in the fourth quarter of FY27 and the second in the first quarter of FY28. The company expects the plants to take around 12 months to achieve full ramp-up, with revenue scaling up by FY29.
The company also said rapid expansion into new markets had offset weakness in the US fluorochemicals business. Agrochemical volumes are recovering in certain areas, supported by strong customer relationships.
SRF reiterated its focus on its polytetrafluoroethylene (PTFE) portfolio and expects stable demand and pricing in the refrigerants business.
Battery-grade aluminium foil: ₹600 crore capex planned in two phases
SRF has planned a ₹600 crore capital expenditure to establish new aluminium foil manufacturing capacity in Madhya Pradesh, with the investment to be undertaken in two phases.
The first phase entails an investment of ₹300 crore and is expected to be completed in 23 months. The facility will cater to battery applications across electric vehicles (EVs) and the energy storage sector.
Management expects to command a 50% markup on aluminium foil sales compared with aluminium pricing, highlighting the potential value addition from the product.
Separately, commercial sales of aluminium foil used in capacitors are expected to commence by the third quarter of FY27.
SRF has identified energy storage, electricals and electronics, semiconductors, next-generation cooling solutions, sustainability and renewables, and aerospace and defence as emerging growth sectors.
The company also said that exports in its foils business had gained momentum, particularly in Europe. Qualification for aseptic packaging with global leaders such as Tetra Pak is also opening up a new revenue stream in a value-added application.
Q2 earnings miss operating expectations
On Wednesday, SRF reported a 31.2% year-on-year increase in net profit to ₹509 crore for the September quarter, below the CNBC-TV18 poll estimate of ₹598 crore. Revenue rose 34.7% to ₹4,904 crore, exceeding the poll estimate of ₹4,695 crore.
Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 22.1% year on year to ₹946 crore, but fell short of the poll estimate of ₹1,055 crore. EBITDA margin contracted 200 basis points to 19.3% from 21.3% a year earlier, against expectations of an expansion to 22.5%.
SRF shares react
Shares of the company gained as much as 3.2% to an intraday high of ₹2,372.50, following the earnings concall on Thursday. The stock has fallen more than 23% since January this year.
