SRF - SRF Ltd. Share Price

During the Q3 FY26 Earnings Call held on January 20, 2026, SRF Limited's management, led by Mr. Ashish Bharat Ram, provided a positive outlook despite certain market challenges. The key points shared include:

1. Financial Performance: SRF reported a gross operating revenue growth of 6% to INR 3,713 crore, with EBIT rising 23% to INR 653 crore, resulting in an EBIT margin of 18%. Profit After Tax (PAT) surged 60% year-on-year to INR 433 crore.

2. Chemicals Business Growth: The Chemicals segment posted a robust revenue growth of 22%, up from INR 1,496 crore in Q3 FY25 to INR 1,825 crore in Q3 FY26. Improved operational efficiencies were noted even amidst pricing pressures from Chinese competitors.

3. Agrochemicals and Phosphonates: Management is optimistic about the upcoming quarter, expecting a strong finish to the year with significant pent-up orders. They are investing INR 180 crore in a new pharma intermediate plant at Dahej, expected to be commissioned in the next 8 months, indicating confidence in growth and diversification strategies.

4. Capex Plans: The management reiterated their capex guidance for FY27, maintaining a target range of INR 2,200 to INR 2,300 crore, primarily focusing on the new site in Odisha, with potential investments in new generation gases amounting to INR 1,500 crore to INR 2,000 crore.

5. Market Dynamics: Despite challenges from irrational pricing by Chinese firms, SRF anticipates eventual price corrections, boosting margins once the market stabilizes. Their strategy remains centered on protecting market share while continuing innovations and operational efficiencies.

6. Sustainability and R&D: The company highlighted its commitment to sustainability and innovation, with 506 patents applied for to date, showcasing an emphasis on developing new technologies.

The management remains optimistic about future growth, supported by strategic investments and an expansive product pipeline.

Questions and Answers from the SRF Limited Q3 & 9M FY26 Earnings Call

Question 1: What is the capex outlook given the current global dislocations?

Answer: Broadly speaking, we remain on track for the previously guided capex of INR2,200 crore to INR2,300 crore for FY27. The majority will be invested in our new site in Odisha, focusing on new generation gases. Initially, we expect INR1,500 crore to INR2,000 crore for the first stage of investment in Odisha. The transition to new gases is inevitable despite global volatility.

Question 2: Given the competition from Chinese pricing, how do you anticipate Specialty Chemicals performance in Q4?

Answer: The expected improvement in Q4 stems from accumulated deferred POs from Q2 and Q3. While there remains pricing pressure from Chinese competitors, we are optimistic given that many of them are struggling for profitability. It's not a question of if recovery will occur, but when.

Question 3: Are we seeing enhanced order visibility for agrochemicals?

Answer: Yes, the positive signs of a revival in agrochemicals are evident as we have many delayed POs from previous quarters that need addressing. Customers are cautious about inventory levels, but this pent-up demand should contribute significantly to Q4 performance.

Question 4: What percentage of our Specialty Chemicals revenues comes from pharmaceuticals, and how are we growing that segment?

Answer: Approximately 10% of our Specialty Chemicals business comes from pharmaceuticals, which we aim to grow to at least 20%. We are seeing increased visibility in terms of the number of molecules and customers. The new INR180 crore pharma intermediate plant is crucial for this growth, complementing our existing capacities.

Question 5: What impacts do you foresee from the newly implemented EU carbon tax?

Answer: We do not engage in refrigerant gas business in Europe, so there's no direct impact there. However, our aluminium foil business may face some effects, though we believe current manufacturing costs make it a minimal risk. We flagged this for awareness, but it's not significant at present.

Question 6: How is the inventory situation affecting specialty chemicals and demand deferment?

Answer: The inventory at customer levels is controlled, which has contributed to deferment. The easing of supply chain challenges post-COVID has facilitated quicker access to materials, allowing customers to manage their inventories better. We anticipate demand to normalize with increasing PO fulfillment in Q4.

Question 7: How does the current market for fluorochemicals, particularly for R32, look in terms of demand versus supply?

Answer: The domestic demand for R32 is around 17,000 - 18,000 tonnes, while current capacity exceeds this demand, leading to exports. Market stability should return as Indian consumption grows, but competition and Chinese pricing will play crucial roles in shaping future dynamics.

Question 8: How are tariffs affecting customer buying behavior in the refrigerants market?

Answer: Customer purchases have become more transactional and cautious due to tariff uncertainties. While long-term contracts for R-134a remain unaffected, those for R32 fluctuate, reflecting hesitation in committing to larger volumes amid tariff volatility.

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