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SRF reported a weak performance in 2QFY25, with a 22% YoY decline in EBIT, primarily due to challenges in the Chemicals sector, which saw a 29% drop. While the Technical Textiles business also struggled, the Packaging Film segment grew by 7%. The management anticipates a recovery in the Chemicals business in 3Q and 4QFY25, supported by a strong order book in specialty chemicals. Consequently, FY25/FY26 EBITDA estimates have been reduced by 13% and 7%, respectively, leading to a target price of INR 2,080, maintaining a Neutral rating.
SRF's chemicals division is grappling with challenges such as intensified Chinese competition, weak agrochemical demand, delays in new product launches, and declining prices in specialty chemicals and HFCs. Despite these issues, the company anticipates revenue growth in H2FY25, supported by a strong order book and improved margins due to technology advancements and increased volumes. ICICI Securities has downgraded SRF to a HOLD rating, reducing the target price to INR 2,250 from INR 2,480, reflecting a slower recovery in the chemicals sector.
SRF shares fell 4.4% to a four-month low of ₹ 2,206 after UBS downgraded the stock from ‘buy’ to ‘sell’, cutting the target price from ₹ 2,700 to ₹ 2,100. The downgrade stems from concerns over weak demand in the agrochemical and refrigerant gas segments, where SRF faces increased competition from Chinese manufacturers, leading to a significant loss in market share and declining export figures.
06:24 17.10.2024
SRF shares fell 4% to an intraday low of Rs 830 after UBS downgraded the stock from 'Buy' to 'Sell', reducing the target price from Rs 2,700 to Rs 2,100. The downgrade is attributed to disappointing demand recovery expectations in SRF's chemical segment, impacted by declining crop prices and increased competition from Chinese suppliers. With the chemical segment contributing significantly to SRF's earnings, analysts warn that a lackluster recovery could lead to further devaluation of the stock.
06:07 17.10.2024
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