SRF - On the cusp of high growth trajectory - Emkay

Reco: BUY
CMP: Rs 347
Target Price: Rs 475

- A multi-product company with unique mix of cash generator (NTCF), expansion scope (Refrigerants), growth opportunity (Specialty Chemicals) & a turnaround story (Packaging Film)

- Cashflow trajectory would be promising with capex cycle behind & growth opportunities ahead. Expect FCF of Rs10bn over next 2 years, leading to a significant net debt reduction

- Low micro predictability, INR appreciation & misallocation of capital are the key business risks. We mitigate the same by building in the lower end of performance range in estimates

- Initiate coverage with Buy rating for a target price of Rs475, valuing it on blended P/E of 7x on FY16E. At target price, SRF would trade at P/B of 1.1x and EV/EBITDA of 4.4x on FY16E.

Source : Equity Bulls

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