SRF Q2 earnings preview: Consolidated PAT estimated to decline 30.4% YoY

SRF, the large-cap diversified chemicals company, is scheduled to report its September quarter numbers on Friday (October 27). Analysts expect the company to post tepid results for the period, with consolidated revenue slipping 12.8 per cent year-on-year (YoY) to Rs 3,250 crore as against Rs 3,728 crore reported during the same period of the last fiscal.

According to Zee Business research, adjusting for the forex loss to the tune of Rs 36 crore, consolidated profit after tax (PAT) at the specialty chemicals company will decline 30.4 per cent YoY to Rs 335 crore for the quarter under review. In the Q2 period of FY23, the company posted a PAT of Rs 481 crore.

Adjusted EBITDA is also seen to take a hit of 18.6 per cent YoY to Rs 655 crore in comparison to Rs 805 crore reported during the corresponding period last year, while margins are foreseen to come in at 20.2 per cent versus 21.6 per cent.

As per Zee Business analysts, demand for both refrigerant gases and fluoropolymers remained subdued during the period under review. Furthermore, refrigerant gas exports to the US were also weak. Analysts attribute this slump in demand to the high channel inventory globally.

Analysts estimate the chemical segment of SRF to post an 11 per cent decline in income, while for the packaging category, it will fall by 17 per cent. The company’s profitability is seen to take a hit on the back of an increase in financing and depreciation costs.

Points to watch out for

Investors need to keep an eye on the price of refrigerant gases as well as track the recovery of exports in the US market. Further, an update on the demand-supply in the packaging films and technical textiles segment needs to be watched.

SRF Q1 results

In the Q1 period of the ongoing FY, the company’s consolidated total revenue declined to Rs 3,350 crore as against Rs 3,904.6 crore reported in the same period last year. Net profit at the company also reduced substantially to Rs 359.3 crore.