SRF Reports 35% Revenue Growth in Q2, Maintains Long-Term Guidance Despite Near-Term Margin Pressures

SRF has reported a 35 per cent year-on-year increase in revenue, alongside a 22 per cent growth in EBITDA and a 31 per cent rise in PAT. Despite facing near-term margin challenges due to elevated input costs, the company maintains its long-term growth guidance.

Diversified manufacturer SRF has announced its financial results, showcasing a 35 per cent year-on-year increase in revenue. The company also posted a 22 per cent growth in EBITDA and a 31 per cent rise in PAT for the period. While revenue figures met initial estimates, profitability figures came in below consensus estimates, primarily weighed down by elevated input costs.

A sectoral breakdown of the performance indicates growth across key business segments. The chemical business posted a revenue increase of 25 per cent, supported by sustained traction in the refrigerant gas segment. Meanwhile, the PFB revenue registered a 51 per cent growth, driven by a sharp improvement in realization amid raw material inflation. The technical textile business also contributed to the top-line growth, reporting a 26 per cent increase in revenue.

Looking ahead, the management has reiterated its financial year 2027 revenue growth guidance of 15 to 20 per cent. Following a 25 per cent growth in the first half of FY27, the management indicated performance leaning towards the upper end of this range, aided by firm pricing in the refrigerant gas segment and higher volumes in specialty chemicals.

However, the near-term margin outlook remains constrained. The company faces ongoing challenges from elevated raw material, freight, and energy costs, alongside limited ability to pass these costs through in the specialty chemicals segment.

Despite these near-term pressures, long-term growth prospects for the company remain supported by several strategic initiatives. These include the scale-up of fluoropolymers—such as PTFE value-added grades, PVDF, FEP, FKM, and the Chemours project—as well as the Odisha HFO plant, a widening pipeline in pharma and agrochemicals, and a strategic focus on sunrise sectors.

Reflecting the performance in the first half of FY27, analysts have revised earnings per share estimates downwards by 8 per cent for FY27, 5 per cent for FY28, and 9 per cent for FY29. The recommendation on the stock remains a 'BUY', with a revised Sum-of-the-Parts (SoTP) based target price of ₹2,800, down from the earlier ₹3,060, based on H1FY29 earnings.

"SRF's latest financial performance highlights a classic business balancing act between robust top-line expansion and margin compression caused by rising input costs. While revenue growth across chemicals and textiles remains strong, the inability to fully pass on elevated freight, energy, and raw material expenses in the short term presents a clear operational hurdle. For business leaders and investors, this underscores the importance of supply chain resilience and long-term strategic investments in specialized sectors to sustain value creation during inflationary cycles." — Dr. Shishir Gupta, Founder & CEO, StartupLanes