SRF Ltd.'s partnership with Chemours Co. to supply fluoropolymers is expected to translate into major revenue growth from fiscal 2027, according to analysts. Under the strategic agreement, SRF will manufacture fluoropolymers and fluoroelastomers at its Dahej facility, with production expected to commence within approximately 12 months.
This is crucial for industries like semiconductor, automotive, aerospace, and oil and gas. The products will be introduced in a phased manner, aligning with market demand and operational readiness. The deal leverages SRF's manufacturing and Chemours' technology. It also provides supply flexibility for Chemours with no upfront capital investment.
Analysts at Citi Research noted SRF had commissioned a 5 kilotonnes per annum PTFE facility in Gujarat's Dahej in October 2023 and was in the process of ramping it from the current 50-60% utilisation. The announced agreement would largely utilise this spare capacity.
The brokerage estimates that PTFE would have accounted for 3-4% of SRF's chemicals segment revenues in FY25. "While the exact products to be manufactured under the agreement have not been announced, PTFE imports into the US are exempt from reciprocal tariffs," Citi said.
DAM Capital said the partnership adds a credible medium-term growth driver for SRF and positions it better in the advanced FP space.
SRF Price Target
Citi: Maintain 'sell' rating with price target of Rs 2,725, a downside of 7% over the previous close.
UBS: Maintain 'sell' rating with price target of Rs 2,400, a downside of 18%.
DAM Capital: Maintain 'Buy' with target price of Rs 3,521, an upside of 20%.
Shares of SRF settled 0.35% higher at Rs 2,929.6 apiece on the NE on Tuesday, ahead of the announcement. The stock has risen 31% in the last 12 months and 18% so far this year.
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