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Dolat Capital Report
SRF Ltd.'s Q1 FY21 earnings print appears disappointing considering the company's core business - Chemicals division, however a startling packaging films performance salvaged the company's profitability.
Sales came below our estimates at Rs 15.4 billionn (our estimate Rs 17.9 billion) down 12.6% YoY.
Ebitda and profit after tax came in-line with our expectations at Rs 3.72 (up by 8.0% YoY) and Rs 1.77 billionn (flattish YoY) respectively.
SRF's strong capex plans (approximately Rs 13.0 billion in FY21) and focus on growing specialty chemicals business are expected to be return on capital employed accretive at full capacity utilisations.
We like SRF's moat in fluorination and ability to scale up its growth engines.
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