SRF Shares Climb As Analysts Raise Target Prices After Q1
Here's what the brokerages have to say about SRF's Q1 FY23 results.
Shares of SRF Ltd. gained as most analysts raised their target prices for the specialty chemicals maker, citing buoyant growth outlook for the firm's fluorospecialty chemicals business and better-than-expected margin in technical textiles and packaging films.
Key Highlights (Consolidated, YoY)
Net profit up 54% at Rs 608 crore
Revenue up 44% at Rs 3,894.72 crore
Ebitda at Rs 1,019.84 crore vs Rs 657.55 crore
Ebitda margin at 26.19% vs 24.36%
Interim dividend of Rs 3.60 apiece declared
Shares of SRF rose more than 5% in intraday trade, before closing with 4% gains—the most in over two weeks. The stock had closed 2% down after its results on Friday.
The trading volume was less than thrice the 30-day average. The stock crossed over the 200-day simple moving average, indicating potential upward price momentum.
Of the 28 analysts tracking the company, 24 maintain a 'buy', four suggest a 'hold' and one recommends a 'sell', according to Bloomberg data. The 12-month consensus price target implies an upside of 14.3%.
Here's the gist of the brokerages' view on SRF post Q1 results:
Kotak Institutional Equities
Reiterates 'buy' and raises target to Rs 2,660, an implied return of 11.15%.
Cautious outlook for packaging films segment is offset by more bullish outlook for chemicals segment.
Company's 'significantly greater bullishness on fluorospecialty chemicals' (exemplified by capex rise in the segment) is a positive surprise.
Expects to see opportunities from disruptions in Europe's chemical industry.
Strong growth in fluorospecialties, tight demand-supply in refrigerants augur well for the company
JM Financial
Maintains 'buy' and raises target to Rs 3,000, an implied return of 30.97%.
Consolidated Ebitda beat estimate due to strong performance in technical textiles and packaging films business.
High-value chemical business reported in-line numbers.
The company's strong growth momentum is likely to continue.
Raises FY23 Ebitda/PAT estimates by 7% to account for higher margins in chemicals business.
Revises FY2024 Ebitda/PAT estimates upwards by 4% to account for contribution for additional capex announcements.
SRF remains at the forefront of capturing growth in the fluorochemicals space.
Jefferies
Reiterates 'hold' with target price of Rs 2,200, an implied return of -3.95%
Sees possibility of lower demand from Europe and margin pressure in H2 FY2022-23.
Better-than-expected margins in technical textiles and packaging films offset weakness in chemical segment margins.
Rise in raw material and energy costs weighed on margins.
Growth outlook remains buoyant with no European customer lowering or cancelling contract values.