SRF Hits 52-Week Low After Q2 Profit Misses Estimates

SRF shares fell 5.5% to Rs 2,178.30 on the NSE on Thursday morning, hitting a 52-week low after September quarter results where revenue beat expectations but profit and margins fell short. Revenue rose 35% year on year to Rs 4,904 crore, ahead of the Rs 4,695 crore estimate. Net profit grew about 31% to Rs 509 crore, but that missed the Rs 598 crore estimate by roughly 15%, and EBITDA of Rs 945 crore also came in below the Rs 1,055 crore expected. The weakness was in chemicals, where revenue rose 25% to Rs 2,079 crore but operating profit grew only 10% to Rs 528 crore. Performance films and foil did better, with revenue up 51% and operating profit up 73% to Rs 206 crore. The board also approved about Rs 600 crore for a battery-grade aluminium foil plant of 12,000 tonnes a year. Chemicals is SRF’s largest profit contributor, so slower profit growth there weighs on the stock even when films and textiles grow strongly. The market is reacting to the gap between sales growth and profit, since strong sales did not reach the bottom line. The battery foil plant adds a new growth leg, but it would start only in September 2028, so it does little for near-term earnings. The stock is now at its lowest level in 52 weeks, against a high near Rs 3,239, a fall of about a third from the peak, with a market cap of roughly Rs 65,000 crore. Investors will watch whether chemicals margins recover in the coming quarters. Disclosure: Palash Kag, Proprietor, Sarathi Research (SEBI Reg. No. INH000012740). No position held in SRF. This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy, sell, or hold any security. Please consult a registered advisor before making investment decisions.