SRF is a conglomerate operating in the
🧪Chemicals,
🧪Textile and
🧪Packaging space
Chemical companies are undergoing a tough time with a slowdown in the business!
SRF reported its results yesterday
A thread🧵 on the business of SRF and the opportunities ahead?
Lets go👇
🧪Chemicals,
🧪Textile and
🧪Packaging space
Chemical companies are undergoing a tough time with a slowdown in the business!
SRF reported its results yesterday
A thread🧵 on the business of SRF and the opportunities ahead?
Lets go👇
The Business of SRF:-
SRF operates in 4 divisions
1. Chemicals
2. Packaging films
3. Technical Textiles
4. Others
The chemicals business is by far the biggest business for SRF
SRF operates in 4 divisions
1. Chemicals
2. Packaging films
3. Technical Textiles
4. Others
The chemicals business is by far the biggest business for SRF
Within the chemicals business, SRF operates in the fluorochemicals business
It operates within the Refrigerant gas space of the fluorochemical.
It has the widest range of refrigerant products
Chemicals business is the growing business for SRF
It operates within the Refrigerant gas space of the fluorochemical.
It has the widest range of refrigerant products
Chemicals business is the growing business for SRF
Packaging Business:-
It is a cyclical business with no moat for the company
Currently experience a severe downcycle for the Packaging business with severe erosion in margins
It is a cyclical business with no moat for the company
Currently experience a severe downcycle for the Packaging business with severe erosion in margins
Textiles business:-
Again a very stagnant business which is not growing too fast
Again a very stagnant business which is not growing too fast
So how were the Q1FY25 results?
🧪Revenue fell by 3.8%
🧪Margins came in at 18.6%
🧪Profit fell by 29%
🧪Company saw a degrowth in the volumes of the chemicals business
🧪Demand remained subdued in the US
🧪Revenue fell by 3.8%
🧪Margins came in at 18.6%
🧪Profit fell by 29%
🧪Company saw a degrowth in the volumes of the chemicals business
🧪Demand remained subdued in the US
Chemicals business:-
The company noted a slowdown in the US business for H1FY25.
However expects demand to come back in the second half.
Guidance for 20% growth in the chemicals business stands
With several new plants coming online during FY24 and a capital investment of around Rs 18 bn, the business aims to ramp up production to support growth in FY25
The company noted a slowdown in the US business for H1FY25.
However expects demand to come back in the second half.
Guidance for 20% growth in the chemicals business stands
With several new plants coming online during FY24 and a capital investment of around Rs 18 bn, the business aims to ramp up production to support growth in FY25
Packaging Business:-
BOPET margins remain under pressure.
The focus on value-added products (VAP) is
showing success, with operational efficiencies and cost optimization prioritized. The new aluminum foil
facility, operational since January 2024, resolved initial technical issues by April, and domestic sales have started
BOPET margins remain under pressure.
The focus on value-added products (VAP) is
showing success, with operational efficiencies and cost optimization prioritized. The new aluminum foil
facility, operational since January 2024, resolved initial technical issues by April, and domestic sales have started
Margins in India and globally faced pressure due to new capacity additions.
BOPP is expected to perform better than the BOPET films segment.
Chinese competitors continue to create challenges in
Southeast Asia, squeezing margins in Thailand and other markets
BOPP is expected to perform better than the BOPET films segment.
Chinese competitors continue to create challenges in
Southeast Asia, squeezing margins in Thailand and other markets
Valuation
SRF trades at about 50x multiple
This is not cheap by any stretch
SRF trades at about 50x multiple
This is not cheap by any stretch
Conclusion
SRF is facing a perfect storm.
Nearly 2 of its business are facing severe slowdown.
The recovery of the chemicals business is something we need to clearly monitor.
However, it is worth monitoring the company
SRF is facing a perfect storm.
Nearly 2 of its business are facing severe slowdown.
The recovery of the chemicals business is something we need to clearly monitor.
However, it is worth monitoring the company
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📈Investing
📈Stock Analysis
Go to my profile and hit the bell icon🔔to always stay updated
Disclaimer:-
This is my study
Not an Investment Advise
Please consult your own investment advisor before investing.
This is my study
Not an Investment Advise
Please consult your own investment advisor before investing.
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