SRF Gets Target Price Hike From Emkay As It Sees Pick-Up In Specialty Chemicals
SRF is best placed, with capex ready in the specialty chemicals business and a complete basket of refrigerant gases, according the brokerage.
SRF Ltd. got a target price hike from Emkay, as the brokerage expects a pick-up in the company's specialty chemicals business driven by stabilisation of existing products. The brokerage maintained a 'buy' rating on the stock.
The target price was raised to Rs 3,250 per share.
There is a firming up of refrigerant gas prices globally, led by increase in pricing in China and phase down-led cuts in some locations. The brokerage notes an improvement in the packaging films business, led by narrowing of the demand-supply gap.
SRF is best placed, with capex ready in the specialty chemicals business and a complete basket of refrigerant gases, according the brokerage. Further, the company is also expected to garner the benefits of the agchem cycle turning around and improving refrigerant prices globally.
Fluorochemicals: Strong Volume Growth
SRF has been seeing strong volume and pricing in refrigerant gases domestically, according to Emkay. Prices of R32/22 chlorine-free, ozone-safe fluorocarbon are going up globally due to the increase in Chinese refrigerant gas prices and the supply being capped by freezing of quota across geographies.
The prices are also pushed higher due to the shift of original equipment manufacturer demand toward lower Global Warming Potential gases.
The brokerage expects a decent pricing environment going into this season. Chloromethane capacities are now seeing optimal utilisation.
Polytetrafluoroethylene volumes will continue growing in financial year 2026, once samples are approved for export customers and new fluoropolymers being commissioned in second half of the coming year, according to the brokerage.
Fluorospecialty To See Decent Pick-up
The fluorospecialty business is seeing improved traction owing to gradual demand pick-up in key products, which were deferred earlier, and reasonable offtake at the customers’ end.
Key product competition from China have now stabilised, according to the brokerage. SRF has made efforts to optimise costs in some key products by introducing various measures aimed at maintaining the absolute contribution margin, noted Emkay.
New AIs will start contributing meaningfully from next year and reach optimal utilisation by financial year 2028, the brokerage said. SRF targets up to 35 to 40% market share in manufacturing these AIs.
Packaging Films Business To Remain Under Pressure
The PFB business is likely to see near-term pressure, and pricing and margins are expected to improve over coming two to three years.
BOPP is faring better than BOPET in the medium term with SRF focusing on VAPs, according to the brokerage. It is better placed during this downcycle.
SRF Share Price
SRF stock rose as much as 3.48% during the day to Rs 2,864.5 apiece on NSE. It was trading 2.36% higher at Rs 2,833.5 apiece, compared to a 0.08% decline in the benchmark Nifty 50 as of 11:45 a.m.
It has risen 18.45% in the last 12 months. Total traded volume so far in the day stood at 2.6 times its 30-day average. The relative strength index was at 60.
Of the 33 analysts tracking the company, 14 have a 'buy' rating on the stock, eight recommend a 'hold' and 11 suggest a 'sell', according to Bloomberg data. The 12-month analysts' consensus target price on the stock is Rs 2,719.5, implying a downside of 4.9%.
