Company Update : SRF Ltd By Motilal Oswal Financial Services Ltd
Operating performance above estimates
* SRF reported overall revenue of INR34.9 (est. in-line) in 3QFY25, up ~14% YoY. Revenue for Chemical/Packaging Film/Technical Textile businesses grew 7%/27%/11% YoY to ~INR15b/INR13.8b/INR5.1b.
* EBITDA stood at INR6.5b (est. of INR6.1b), up 12% YoY.
* EBITDA margins contracted 40bp YoY to 18.7% (est. of 17.1%). RM cost as a % of sales stood at 51.7% in 3QFY25 vs. 50.9% in 3QFY24. Employee cost stood at 7.5% vs. 8%, while power cost stood at 9.5% vs. 10.5%. Other expenses stood at 12.6% vs. 11.5%.
* EBIT margin in the Chemical/Packaging Film businesses expanded 120bp/240bp YoY to 24.3%/6.5%, while for Technical Textile, it contracted 350bp YoY to 11.6%.
* Adj. PAT grew 12% YoY to INR3.1b (est. of INR2.6b), adjusted for a forex loss of INR342m in 3QFY25.
* The Specialty Chemicals business experienced an inventory overhang among agrochemical customers but saw a gradual increase in demand. The Fluorochemicals business gained strong OEM support for refrigerants domestically, while the Chloromethanes segment remained stable.
* The Packaging Films business reported healthy growth, with SRF maintaining a strong industry position. However, Aluminium Foil margins faced pressure due to lower-cost imports from China and Thailand.
* The Technical Textiles business underperformed due to weak demand and margins in Belting Fabrics, while the Polyester Industrial Yarn segment achieved full capacity utilization.
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