Synopsis: SRF Limited is in focus after Motilal Oswal assigned a Buy rating with a target price of ₹3,350, implying 21%. The brokerage cites strong fluorochemicals growth, a ₹2,300 crore HFO expansion, improving profitability, recovery potential in speciality chemicals, and an attractive long-term earnings growth outlook.
The shares of a Mid-Cap company that specialises in manufacturing industrial and speciality intermediates, with a diverse global portfolio spanning Fluorochemicals, Speciality Chemicals, Performance Films & Foil, and Technical Textiles, are in focus following Motilal’s target, with upside potential of 21 per cent.
With a market capitalisation of Rs. 81,635.40 crores in the day’s trade, the shares of SRF Ltd rose upto 0.8 percent, making a high of Rs. 2,789.35 per share compared to its previous closing price of Rs. 2,764.55 per share.
What Happened
SRF Ltd, engaged in manufacturing industrial and speciality intermediates, is in the spotlight after Motilal Oswal’s target as they have given a Buy rating with a target price of Rs. 3,350, implying an upside potential of 21 percent from the previous closing price.
Reason for the target
Strong Growth in Fluorochemicals Business
Revenue for the fluorochemicals division increased by about 60% year over year in FY26, setting a record. Both domestic and international markets continued to see strong demand for refrigerant gases, and bigger volumes and better realisations increased profitability. It is anticipated that this area will continue to support the company’s growth trajectory and has emerged as a significant profit generator.
Large HFO Capex Creating a New Growth Engine
SRF is spending over Rs. 2,300 crore on next-generation Hydrofluoroolefin (HFO) refrigerants, which are greener substitutes for traditional refrigerants. The company is well-positioned to gain from the growing preference of worldwide regulations for low-global-warming-potential products. This investment has the potential to boost SRF’s leadership in fluorochemicals and provide a sizable long-term income stream.
Recovery Potential in the Speciality Chemicals Segment
The agrochemical industry’s low demand and customer inventory adjustments put pressure on the speciality chemicals industry. Nonetheless, over the coming years, management anticipates better demand circumstances. Stronger growth might be fueled starting in FY27 by the introduction of new products, capacity increases, and a rebound in the demand for agrochemicals worldwide.
Significant Improvement in Profitability
With PAT increasing 49% year over year to Rs. 2,040 crore, SRF recorded a significant boost in earnings. Better operating leverage, a favourable product mix, and enhanced performance in important business divisions all contributed to the EBITDA margins’ recovery to 22.8%. In the upcoming years, higher margins are anticipated to sustain earnings growth.
Attractive Valuation Supported by Earnings Growth
Motilal Oswal expects SRF to deliver around 22% PAT CAGR through FY28, with earnings per share projected to reach Rs. 101. Despite this strong growth outlook, the stock trades at about 27 times FY28 earnings, which the brokerage considers reasonable for a high-quality speciality chemicals company with multiple long-term growth drivers.
Can Fluorochemicals Fuel SRF’s Next Growth Phase?
SRF’s fluorochemicals business has emerged as its strongest growth driver, delivering nearly 60 percent year-on-year revenue growth in FY26. Strong demand for refrigerant gases across domestic and international markets, coupled with better realisations and higher volumes, helped the segment achieve record performance. This growth has significantly contributed to the company’s earnings recovery and improved profitability.
Plans for SRF to invest over Rs. 2,300 crore in next-generation HFO refrigerants should improve the company’s standing in the fluorochemicals industry. The company is well-positioned to profit from the shift in worldwide demand toward environmentally benign refrigerants. Fluorochemicals may continue to be a crucial component of SRF’s next stage of expansion when combined with high expectations for earnings growth and expanding margins.
Financials & Others
The company’s revenue rose by 7.00 percent from Rs. 4,313 crores in Q4FY25 to Rs. 4,615 crores in Q4FY26. Meanwhile, Net profit rose from Rs. 526 crores to Rs. 582 crores in the same period.
SRF maintains a healthy financial profile with a ROCE of 14.6 percent and ROE of 14.3 percent, reflecting its ability to generate consistent returns from its capital and shareholder investments. The company also has a low debt-to-equity ratio of 0.36, indicating a conservative leverage position and a strong balance sheet to support future growth initiatives.
SRF Limited is a diversified manufacturing company with a strong presence in fluorochemicals, speciality chemicals, packaging films, and technical textiles. The company serves a wide range of industries, including refrigeration, pharmaceuticals, agrochemicals, food packaging, and industrial applications, with operations across domestic and international markets.
It has a strong global presence, exporting its products to more than 90 countries while maintaining operations across 5 countries. The company operates 16 manufacturing facilities and is supported by a global workforce of over 9,500 employees, enabling it to serve customers across diverse industries and geographies.
Its business portfolio is led by the Chemicals segment, which contributes 49 percent of revenue, followed by Performance Films & Foil at 37 percent. The remaining 14 percent comes from Technical Textiles and other businesses, providing SRF with a diversified revenue base and multiple growth avenues.
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