SRF Q2 Review - Refrigerant-Gas Likely To Aid Profitability In H2 FY22: ICICI Securities

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ICICI Securities Report

SRF Ltd.’s Q2 FY22 print was not encouraging, but for strong margin expansion in chemical business from higher realisations in hydrofluorocarbons (refrigerant-gas), we anticipate even higher benefit in H2 FY22.

Technical textiles and packaging films margin compression QoQ was expected, but pace has negatively surprised.

Ref-gas utilisation increase along with higher spreads should support near-term profitability and continued growth in specialty chemicals (guidance: 15-20% growth in FY22 stays).

Rising power cost and raw material pressure could be key risks.

SRF has committed Rs 20 billion capex in FY22 (Rs 6.6 billion in H1 FY22), of which, chemicals would see Rs 12 billion investment.

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