SRF Q2 profit slumps 37% on weak operational performance, topline slips 15%

SRF's operating performance during the quarter was weak too, compared to expectations as operating profit or EBITDA stood at ₹625 crore, well below the ₹693 crore estimate from the CNBC-TV18 poll.

EBITDA margin for the quarter stood at 19.7%, while the estimates projected the figure at 20.7%. On a year-on-year basis, while EBITDA slipped nearly 19%, margin contracted by 90 basis points.

The Board has approved a project to set up a new facility in Gujarat's Dahej. The new facility will be utilised in producing an agrochemical intermediate.

SRF will spend ₹235 crore as capex to set up this new facility. The capex will be funded through a mix of debt and internal accruals.

The market reacted positively to SRF's capex plan as the stock gained 3.45% after the result announcement. It was trading at ₹2,175.95 on the National Stock Exchange, up 3.30% from the previous day.

"During the quarter, we felt the brunt of the destocking and inventory rationalization phenomenon in our Chemicals Business. Having said that, we are now beginning to see some positive traction that should bode well for a better second half of FY24. The overcapacity in our Packaging Films Business will continue for some more time," said Chairman and Managing Director Ashish Bharat Ram.

Established in 1970, SRF Ltd with an annual turnover of ₹8,295 crore is a chemical based multi-business entity engaged in the manufacturing of industrial and specialty intermediates.

The company's diversified business portfolio covers fluorochemicals, specialty chemicals, packaging films, technical textiles, coated and laminated fabrics. It has 11 manufacturing plants in India and one each in Thailand, South Africa and Hungary.