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Higher HFC volumes and realisations support growth

SRF reported consolidated revenue of INR49bn in Q2FY27, up 35% YoY but down 3% QoQ. The Chemicals segment grew 25% YoY, driven by robust performance in Fluorochemicals on the back of higher volumes and improved realizations. However, Specialty Chemicals remained subdued, with volume recovery now expected in select pockets in H2FY27. The Performance Films & Foil business reported 51% YoY and 5% QoQ revenue growth, supported by stronger demand across geographies and higher aluminium foil exports to Europe. Segment EBIT margin normalised to 9.7% from 17.3% in Q1FY27, as the benefit from low-cost inventory was absent during the quarter. Technical Textiles also delivered 25% YoY revenue growth, supported by exports and new customer additions in the belting fabric segment.

On the capex front, projects spanning HFO, backward integration and specialty fluoropolymers are progressing as planned. Additionally, SRF announced an investment of INR6bn to establish a 12,000mtpa aluminium foil manufacturing facility, with Phase I expected to be commissioned by Sep’28.

While the Fluorochemicals business continues to benefit from strong refrigerant realizations, subdued agrochemical demand and persistent oversupply from Chinese players remain key challenges for Specialty Chemicals. Accordingly, we remain cautious on the stock. However, following the recent sharp correction in the share price, we upgrade our rating to Hold from Reduce, with an SOTP-based target price of Rs2,349.

Performance Films & Foil Business grew 51% YoY and 5% QoQ:

Consolidated revenue stood at INR49bn (+34.7% YoY, -2.6% QoQ; PLe: Rs44bn, Consensus: INR46bn), driven by 51% YoY growth in the Performance Films & Foil Business segment. Performance Films & Foil Business EBIT margin contracted by 760bps QoQ but expanded by 330bps YoY However, margins declined sharply QoQ, as Q1 benefited from lower inventory costs. Technical Textiles revenue grew 25% YoY, with EBIT margin expanding to 12.2% from 8.9% in Q2FY26. Chemical Business revenue grew 25% YoY but declined 10% QoQ, while EBIT margin contracted by 220bps QoQ and 350bps YoY.

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