Company Update : SRF by Motilal Oswal Financial Services Ltd
Operating performance in line
* SRF reported a total revenue of INR38.2b (est. INR41.6b) in 1QFY26, up ~10% YoY. The Chemical/Packaging film revenue grew 24%/6% YoY to ~INR18.3b/ INR14.3b, while Technical textile revenue declined 11% YoY to INR4.6b.
* EBITDA margin expanded 360bp YoY to 21.5% (est. 20%), while gross margin expanded 270bp YoY to 50% in 1QFY26 compared to 47.3% in 1QFY25. As a percentage of sales, employee costs stood at 7.3% (vs. 7.3% in 1QFY25), power costs were 9.5% (vs. 9.9%), and other expenses came in at 11.7% (vs. 12.2%). EBITDA stood at INR8.2b (est. INR8.3b), up 32% YoY.
* EBIT margins in the Chemical /Packaging film businesses expanded 670bp/ 340bp YoY to 27.3%/7.4%, while Technical Textile’s EBIT margin contracted 480bp YoY to 8.1%. ? Adj. PAT grew 57% YoY to INR4.2b (est. INR4.4b) – adjusted for the forex gain of INR87m in 1QFY26.
* The Board of Directors approved two new projects: 1) a BOPP film manufacturing facility in Indore, Madhya Pradesh, with a capex of INR4.9b, and (ii) an agrochemical production facility in Dahej, Gujarat, at a capex of INR2.5b.
* Specialty Chemicals experienced strong growth due to rising agrochemical intermediate demand, strategic pricing, and export strength. Fluorochemicals also performed well, aided by higher refrigerant gas prices and increased exports, offsetting domestic market weakness.
* In 1QFY26, the Performance Films & Foil Business achieved a record production, supported by better efficiency and focus on high-impact valueadded products. Meanwhile, Nylon Tyre Cord Fabric’s demand declined domestically, and the Belting Fabrics segment faced pricing pressure from the continued Chinese dumping.
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