Indian chemicals maker SRF's Q1 profit falls on subdued global demand

SRF

23/07/2024 10:24

BENGALURU, July 23 (Reuters) - Indian chemicals and polymers maker SRF  SRFL.NS  posted a
drop in profit for the sixth straight quarter on Tuesday, hurt by sustained weak demand in its
mainstay chemicals business.
    The unit consists of specialty chemicals, fluorochemicals and agrochemicals among others,
contributes nearly half of company's quarterly revenue.
    SRF reported a consolidated net profit after tax of 2.52 billion rupees ($30.11 million),
down about 30% from last year.
    Total expenses jumped nearly 10%, led by rise in input costs.
    For further earnings highlights, click  urn:newsml:reuters.com:*:nFWN3JF0VM
    
KEY CONTEXT
    The chemicals industry has been grappling with high inventory and destocking for the past few
quarters, leading to continuous pressure on volume and margins, according to analysts. 
    Jefferies analysts said in a pre-earnings note their channel checks suggested weakness in
SRF's specialty portfolio in first quarter. SRF's largest product in specialty chemicals (~22% of
segment revenues) has seen 16% price erosion in the past year on account of new Chinese capacity,
the brokerage added.
    
PEER COMPARISON
    
                              Valuation     Estimates (next   Analysts' sentiment           
                              (next 12        12 months)                                    
                              months)                                                       
                 RIC        PE     EV/EBI  Revenue  profit    Mean    # of      Stock to    Div
                                   TDA     growth%  growth%   rating  analysts  price       yield
                                                              *                 target**    (%)
 SRF Ltd          SRFL.NS   38.59   21.56   14.75    27.53    HOLD          25     1.02      0.30
 Coromandel       CORF.NS   23.85   15.70   5.06     14.29    BUY            9     1.16      0.38
 International                                                                              
 Ltd                                                                                        
 Deepak           DPFE.NS   12.92    7.77   14.00    42.26    BUY            1     1.16      1.12
 Fertilisers                                                                                
 and                                                                                        
 Petrochemicals                                                                             
 Corp Ltd                                                                                   
 PI Industries    PIIL.NS   34.22   23.18   15.56     3.89    BUY           23     0.94      0.38
 Ltd                                                                                        
 
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong
Sell

** The ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the
stock is trading above the PT


APRIL-JUNE STOCK PERFORMANCE        
        
        
    
    
-- All data from LSEG

-- $1 = 83.6817 Indian rupees


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SRF June Qtr 2024 vs Peers    https://tmsnrt.rs/4bSolzL
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 (Reporting by Ashish Chandra in Bengaluru)
 ((ashish.chandra@thomsonreuters.com; +91 7982114624;))