SRF Q4 Review - Robust Performance Continues: Motilal Oswal

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Motilal Oswal Report

SRF Ltd.’s Q4 FY21 operating performance was robust on the back of margin expansion across segments (on a YoY basis).

On a QoQ basis, Ebit margin has further moderated (down 420 basis point QoQ) in the packaging segment.

The company’s performance over the last three years has been robust, with an earnings compound annual growth rate of 42% and stock price CAGR of ~34%.

On the other hand, we expect the earnings momentum to slow to a 21% CAGR over FY21–23, primarily due to-

1. margin contraction in the packaging segment and

2. reduced growth momentum in specialty chemicals, weighed by a high base.

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