Add SRF, target price Rs 2330: HDFC Securities

HDFC Securities has add call on SRF with a target price of Rs 2330. The current market price of SRF Ltd. is Rs 2219.65.
Time period given by analyst is one year when SRF Ltd. price can reach defined target.

SRF Ltd., incorporated in the year 1970, is a Large Cap company (having a market cap of Rs 62638.21 Crore) operating in Diversified sector.


SRF Ltd. key Products/Revenue Segments include Chemicals (Industrial), Packaging Film, Textiles, Others for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 3556.65 Crore, up 5.96 % from last quarter Total Income of Rs 3356.54 Crore and up 35.72 % from last year same quarter Total Income of Rs 2620.61 Crore. Company reported net profit after tax of Rs 605.65 Crore in latest quarter.

Investment Rationale
The brokerage retains ADD rating on SRF, with a target price of INR 2,330, on the back of (1) continued healthy performance from speciality chemicals business and packaging films business; (2) strong balance sheet; and (3) deployment of Capex for high-growth speciality chemicals business over the next 3-4 years to tap opportunities emerging from agrochemical and pharmaceutical industries. EBITDA/APAT were 15/25% above estimates, owing to lower-than-expected raw material costs and lower-than-expected tax outgo but were offset by higher-than-expected finance cost.

Promoter/FII Holdings
Promoters held 50.73 per cent stake in the company as of 31-Mar-2022, while FIIs owned 19.6 per cent, DIIs 8.71 per cent.