SRF's profit rises 31%, but margins hit an eight-quarter low

SRF Limited (SRF) reported Q2 FY27 consolidated revenue of ₹4,904 crore, up 35% year-on-year. Net profit rose 31% to ₹509 crore, but EBITDA margin fell to 19.3% from 21.3%. This is why I would not judge the quarter by profit growth alone. EBITDA increased 22% to ₹946 crore, which means earnings grew more slowly than revenue. That gap matters. If sales continue to rise faster than operating profit, the company may be facing cost pressure or a less profitable sales mix. The segment numbers show a mixed picture. Performance Films & Foil revenue surged 51% to ₹2,122 crore, with operating profit up 73%. Chemicals revenue increased 25% to ₹2,079 crore, but operating profit grew only 10%. That difference is worth watching. Stronger sales in chemicals have not translated into equally strong operating-profit growth. SRF has also approved approximately ₹600 crore for a battery-grade aluminium foil facility with planned annual capacity of 12,000 tonnes. Phase I is expected by September 2028, with Phase II by September 2030. This could give SRF exposure to battery and energy-storage supply chains. But the returns will depend on utilisation, customer demand and the economics of the new facility. The investment itself does not guarantee attractive returns. My view: SRF is growing, but margin recovery matters more than another quarter of headline revenue growth. I would watch whether chemicals profitability improves, whether the films business sustains its performance and how the battery-foil investment progresses. My stance: The growth story remains credible, but I would want evidence of margin stabilisation before becoming more positive.