SRF Ltd., the manufacturer of industrial and specialty intermediates said on Monday that packaging films business downcycle is likely to continue for the medium-term. It is this pressure in the packaging films business that resulted in the company's June quarter net profit dropping by 41 percent year-on-year.
For the June quarter, SRF reported a net profit of Rs 359 crore, down from Rs 608 crore that it reported during the same period last year. The figure was also well below the CNBC-TV18 poll of Rs 454 crore.
The company's revenue of Rs 3,338 crore was also lower than the CNBC-TV18 poll estimate of Rs 3,586 crore, and down by 14.3 percent on a year-on-year basis.
Operating profit or EBITDA fell by 30 percent year-on-year to Rs 696.2 crore from nearly Rs 1,000 crore last year, and also lower than the Rs 805 crore estimate, while EBITDA margin fell 520 basis points to 21 percent, from 26.2 percent last year. A CNBC-TV18 poll had pegged the figure of 22.4 percent.
For the company's various business segments, the technical textiles and packaging business saw a double-digit drop, while the chemicals business saw a minor decline compared to last year.
Operating profit of the packaging business saw a much significant drop of over 80 percent year-on-year, while the EBIT of technical textiles and chemicals declined by 48 percent and 12 percent respectively from last year.
The management said that the specialty chemicals business did well despite the weak global demand and ongoing inventory realisations. The packaging films business suffered due to significant supply addition in the BOPET and BOPP film segments and the global economic slowdown.
Additionally, the board has approved a capex of Rs 16.08 crore to expand the capacity of Anhydrous Hydrogen Chloride that is used in pharma intermediates at the Dahej plant.
"There is a lot of inventory unwinding going on globally and this will have some impact on the business in the next couple of quarters," Chairman and Managing Director Ashish Bharat Ram said. "On the positive side, long-term projects remain on track and we expect to keep the capex momentum intact," he added.
Shares of SRF ended 3 percent lower at Rs 2,146.60.
First Published: Jul 24, 2023 3:24 PM IST
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