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SRF’s Q1 EBITDA at Rs8.3bn (+38% YoY/-13% QoQ) was in line with consensus/our estimate of Rs8.3bn. Healthy YoY performance was driven by a) better refrigerant gas pricing in exports market which was offset by lower domestic volumes, b) volume recovery for key agrochemical intermediates in specialty chemicals, and c) higher realizations and increased volumes of BOPP due to a fire incident at a domestic competitor’s plant. The management maintained its FY26 guidance for chemicals business revenue growth at +20%; capex guidance was raised to ~Rs25bn for FY26 (vs Rs12bn spent in FY25). The company expects newly launched products in specialty chemicals to ramp up, and a firm pricing environment in refrigerant gases (given the current demandsupply situation) in FY26. We retain ADD with an unchanged TP of Rs3,25

Chemicals business (CB) saw continued growth momentum CB revenue grew ~24% YoY to Rs18.4bn in Q1 (EBIT margin was 27.3% vs 20.7% YoY), on better capacity utilization led by demand uptick for key agrochemical intermediates and a higher pricing environment for the refrigerant gas business. The company is positive about growth due to ramp-ups in recently commissioned plants, newly launched products, and volume recovery in key products. Refrigerant gas volumes/pricing to improve, led by stable global demand and tightening of demand-supply balance in China. The AHF-3 plant commissioned last quarter is stabilizing. Chloromethanes demand was stable, and pricing remained range-bound. PTFE volumes will continue to grow in FY26, with exit utilization rate at 75-80%. The Board has approved capex of Rs2.5bn for setting up a dedicated facility for an agchem intermediate, with capacity of 12ktpa

Performance films and foil business (PFB) to focus on profitability from VAPs PFB revenue grew ~6% YoY to Rs14.2bn in Q1, with a QoQ improvement in EBIT margin to 9.9% vs 7.4%. EBIT margin improvement was a factor of the highest-ever production, reflecting higher operational efficiency and optimal capacity utilization. Aluminum foil business saw improvement in volumes/realization on a sequential basis, led by implementation of ADD. Capex of Rs4.9bn is approved to set-up a 60ktpa BOPP film manufacturing facility in Indore (expected commissioning in 24 months). Hungary operations improved, led by lower energy cost and exports to mainland Europe. South Africa delivered a stable performance, while pricing pressure persists in Southeast Asia, impacting Thailand operations and profitability.

Technical textile business (TTB) saw mixed performance across products SRF’s TTB revenue declined ~11% YoY to Rs4.6bn in Q1, with a sequential decline in margins (8.1% vs 12.9% YoY). During the quarter, the company saw i) higher sales of nylon and polyester industrial yarn (PIY), ii) a decline in domestic demand for nylon tyre cord fabrics (NTCF), and iii) increased pricing pressure for belting fabrics due to continuous dumping by China. However, it saw stable performance in other areas.

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