Buy SRF; target of Rs 3650: Motilal Oswal

Motilal Oswal's research report on SRF

SRF delivered a strong start to FY26, with EBIT surging 41% YoY in 1QFY26. This growth in EBIT was driven by a robust growth of 64%/62% YoY in the chemicals/packaging films businesses, despite a weak summer and ongoing global uncertainties. The technical textiles business declined 44% YoY in 1Q. We expect this momentum to continue, with the agrochemicals segment likely to pick up, fueled by a robust product pipeline and volume growth in key intermediates. Further, the Fluorochemicals business is anticipated to see increased traction in PTFE sales and stable global demand for refrigerant gases. We broadly maintain our FY26/FY27 EBITDA estimates and reiterate our BUY rating. We value the stock on an SoTP basis to arrive at our TP of INR3,650.

Outlook

We build in a revenue/EBITDA/Adj. PAT CAGR of 16%/30%/42% over FY25-27E. We broadly maintain our FY26/FY27 EBITDA estimates and reiterate our BUY rating. We value the stock on an SoTP basis to arrive at our TP of INR3,650.

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