Brokerages mixed on SRF stock post Q4 earnings report. Should you buy, sell or hold?

SRF share price target, SRF share price, SRF Q4 results: SRF Ltd. shares on Wednesday, May 8 traded in the negative territory on D-Street, a day after the Chemical firm released its Q4 results during market hours. Brokerages remained mixed on the chemical maker stock after the earnings with Morgan Stanley continuing with an 'overweight' rating on the stock, and Jefferies maintaining an 'underperform' call on the stock. The chemical stock fell nearly four per cent to the day's low of Rs 2,325.15 on the NSE. At close, the counter settled at Rs 2,340, down 3.18 per cent on NSE.

SRF Q4 profit falls 25% 

SRF posted a 25 per cent decline in its net profit to Rs 422 crore for the quarter ended March 2024 on a lower income. "The company's Profit After Tax (PAT) decreased 25 per cent from Rs 562 crore to Rs 422 crore in Q4FY24 when compared with the corresponding period of the last year," SRF said in a statement. The company's consolidated revenue declined 6 per cent to Rs 3,570 crore in the fourth quarter of the last fiscal from Rs 3,778 crore in the year-ago period.

In 2023-24 fiscal, SRF's revenue decreased 12 per cent to Rs 13,139 crore from Rs 14,870 crore in the preceding year. The company's profit after tax decreased 38 per cent to Rs 1,336 crore in the last fiscal from Rs 2,162 crore in the 2022-23 fiscal.

SRF share price target: Brokerage mixed

Jefferies has maintained an underperform rating on the SRF stock with a target of Rs 2,065 apiece. Meanwhile, Morgan Stanley has retained an overweight call on the chemical maker with a target of Rs 2,557. The brokerage stated the following key points in its note:

• The chemicals segment was slightly ahead of expectations, and the packaging and textiles missed
• Lower tax rate underpinned PAT beat
• EBITDA missed with a beat in the chemical segment offset by another tough quarter for packaging and textiles
• Depreciation and interest expenses saw an increase quarter-on-quarter (QoQ) reflecting the commissioning of key projects

Management Commentary 

SRF Chairman and Managing Director Ashish Bharat Ram said, "While the general performance has been weak, we have seen a reasonable recovery in our chemicals business in the fourth quarter, as we had envisaged. We believe that this recovery will pick up pace in the second half of FY25." In 2024, SRF commemorates 50 years since the start of manufacturing.

What does SRF do?

With an annual turnover of Rs 12,910 crore (USD 1.6 billion), the company's diversified business portfolio covers fluorochemicals, specialty chemicals, packaging films, technical textiles and coated and laminated fabrics.

The company has 13 manufacturing plants in India and one each in Thailand, South Africa and Hungary. It exports to 100-plus countries.

(with PTI inputs)

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