Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

SRF Limited - FY22E growth capped on higher plants utilisation - ICICI Securities

Posted On: 2021-05-07 05:41:06 (Time Zone: UTC)


SRF's chemical business revenues and EBIT came above estimates in Q4FY21, and performance in other businesses were equally strong. Specialty chemical revenue rose 43% YoY in FY21 (guidance: >25%) was strong, but flattish ref-gas revenues disappointed. SRF has guided for 10-15% growth in specialty chemicals in FY22 on large base while its fresh capex may show result only in FY23E. But, FY22E can see expansion in margins on operating leverage, but FY23E may see pressure on the same due to large planned launches. SRF remains aggressive on capex in specialty chemicals and it has been strongly rewarded with growth, which may continue in the medium term too. We raised our EPS estimates by 11.5%/10% in FY22E/FY23E on higher packaging film margins. We raise our target price to Rs6,756 (from Rs5,644) on higher chemical segment multiple at 22x (from 18x). Maintain HOLD.

- Chemical business delivers growth on high base. SRF's revenues rose 40% YoY to Rs26bn driven by higher realisation in packaging film business and technical textiles on rise in RM prices and strong performance in chemical business. Chemical business revenues were up 31% YoY to Rs11.5bn on higher growth in both specialty and ref-gas. Specialty chemicals benefited from a few high-value batch-manufactured products. Packaging film revenues rose 63% YoY to Rs9.8bn on ramp-up in Thailand and Hungary, and higher realisation on rise in RM cost. Technical textile revenues were up 27% YoY on faster than expected recovery in domestic tyre industry and RM inflation.

- EBITDA up 78% YoY to Rs6.4bn. Gross profit rose 39% YoY to Rs13bn and margin dipped 61bps YoY to 50% due to steady spread and higher realisation. EBITDA was up 78% YoY to Rs6.4bn due to operating leverage. EBIT expanded 101% YoY to Rs5.2bn.

- Strong EBIT across business. Chemical business EBIT rose 73% YoY to Rs2.8bn. EBIT margin increased by 590bps YoY to 24% on higher contribution from specialty chemicals. Packaging films EBIT was up 67% on rise in volumes and strong spreads, while margin dip was due to stable spread and higher RM prices. Technical textile EBIT came in at Rs728mn, up 96% on low base and likely inventory gains.

- Call highlights: 1) Specialty chemical revenues were Rs23bn in FY21, up 43% YoY; SRF has guided for 10-15% growth in FY22 (existing capacity can deliver revenues of Rs27bn-28bn). 2) Company does see long-term growth intact and continues to commit capex of Rs6bn-6.5bn in specialty chemicals in FY22. 3) SRF has R&D product pipeline of 60 and plans to commercialise 2-3 products each quarter with 15-16 products under production. 4) Ref-gas exit capacity utilisation for HFC is peaked, but we see headroom for capacity utilisation from full year perspective; SRF is investing in R-134a efficiency through change in catalyst. 5) Capex for FY22 is seen at Rs16bn-19bn with 60-70% allocation for chemical business (including spend on PTFE, MPP-4, CMS, R-32 and others), Rs1.5bn in technical textiles and balance in packaging films.

Shares of SRF LTD. was last trading in BSE at Rs.6861.65 as compared to the previous close of Rs. 6841.3. The total number of shares traded during the day was 14680 in over 2688 trades.

The stock hit an intraday high of Rs. 6986.05 and intraday low of 6760. The net turnover during the day was Rs. 100720883.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.


Other Headlines:

CESC Q4FY21 Results Review Report - Loss decline, strong CF make valuation attractive - HDFC Securities

White Goods & Durables - Analysis of pressure cooker market: TTK Prestige is key beneficiary - ICICI Securities

CESC - Good earnings in a challenging environment - ICICI Securities

Somany Ceramics - Walking the talk - ICICI Securities

DB Corp - Rise in newsprint price adds to risk - ICICI Securities

CEAT - Market share ambitions remain strong - ICICI Securities

Consumer Staples & Discretionary - Worm's world view #32: Conversations with paint dealers regarding price hikes - ICICI Securities

Oil & Gas - Oil, gas & spot LNG surge to bring gains for GAIL & OIL - ICICI Securities

Asset Management Companies - Positive trends to support earnings - ICICI Securities

Q4FY21 Result Update - Lemon Tree Hotels - ICICI Direct

Q4FY21 Company Update - Globus Spirits - ICICI Direct

Q4FY21 Result Update - DB Corp - ICICI Direct

Q4FY21 Result Update - Somany Ceramics - ICICI Direct

KEC International: Company Update - Building on diversification - HDFC Securities

LIC Housing Finance - Q4 FY21 Result Update - YES Securities

Entertainment Network Ltd - Beating on solutions business - ICICI Securities

Asahi India Glass - Operating leverage, product mix aid margins - ICICI Securities

Whirlpool of India - Market leading revenue growth - ICICI Securities

Lemon Tree Hotels - Wait for recovery gets longer - ICICI Securities

LIC Housing Finance - Stupendous growth momentum; needs to shore up provisioning and capital buffer - ICICI Securities

Quant Pick - Bank of Baroda - ICICI Direct

Company Update - Amara Raja Batteries - Investor Event Outcome - ICICI Direct

Q4FY21 Result Update - Bhel - ICICI Direct

Q4FY21 Company Update - NRB Bearings - ICICI Direct

CESC - Q4FY21 First Cut - ICICI Direct

Q4FY21 Result Update - Entertainment Network India - ICICI Direct

LIC Housing Finance Results Review Report - Balance sheet beefs up; P&L to stay soft - HDFC Securities

Jubilant FoodWorks 4QFY21 Results Review Report - Missing excitement; recovery priced in - HDFC Securities

BFSI Sector Update - MFI Consultation Paper Takeaways - Incrementally positive for NBFC-MFIs - HDFC Securities

Q4FY21 Result Update - JK Cement - ICICI Direct

Q4FY21 Result Update - Minda Industries - ICICI Direct

Stock Tales - Indo Count Industries - ICICI Direct

IPO Review - Krishna Institute of Medical Sciences Ltd - ICICI Direct

Q4FY21 Company Update - Greenply Industries - ICICI Direct

IPO Review - Dodla Dairy Ltd - ICICI Direct

Lemon Tree Hotels - Q4FY21 First Cut - ICICI Direct

Jubilant Foodworks - Q4FY21 investor call takeaways - YES Securities

Greenply Industries Ltd - Q4 FY21 Result Update - YES Securities

Whirlpool of India Ltd - Q4 FY21 Result Update - YES Securities

New India Assurance Report - CoRs disappoint yet again - HDFC Securities

Maintain BUY on Kajaria Ceramics - Performance shines through; outlook bright - HDFC Securities

Retain ADD on Deccan Cement - Volume strong; high other expense dents margin - HDFC Securities

Reiterate ADD on NHPC - Lower generation impacts earnings - HDFC Securities

Maintain BUY on JK Cement - Robust volume and utilisation - HDFC Securities

Maintain BUY on DLF - Gaining traction - HDFC Securities

Maintain BUY on Capacite Infraprojects - Marginal miss - HDFC Securities

DLF Ltd - Q4 FY21 Result Update - YES Securities

Greenply Industries Ltd - Q4FY21 first cut - YES Securities

Coal India - Coal makes a comeback - ICICI Securities

Kajaria Ceramics - Q4FY21 beat largely priced in - ICICI Securities


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020