Stock recommendations: Reduce SRF, target price Rs 2141: ICICI Securities

ICICI Securities has reduce call on SRF with a target price of Rs 2141. The current market price of SRF Ltd. is Rs 2668.5. 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 79077.72 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 31-12-2021, the company reported a Consolidated Total Income of Rs 3356.54 Crore, up 17.77 % from last quarter Total Income of Rs 2850.09 Crore and up 54.82 % from last year same quarter Total Income of Rs 2168.09 Crore. Company reported net profit after tax of Rs 505.54 Crore in latest quarter.


Investment Rationale
SRF’s chemical business EBIT will gain from steady growth in fluorospecialty, and strong price increase in ref-gas (HFC) and anti-dumping duty on HFC imports in India. SRF should have seen lower HFC exports in Mar’22 due to licensing norms requirement, but the brokerage expects the missed revenues to be booked in Q1FY23E. Technical textiles was impacted from slowdown in auto sales while packaging films’ EBIT is likely to be stable QoQ. It expects SRF’s net profit to grow 59% YoY / 20% QoQ to Rs6bn.

Promoter/FII Holdings
Promoters held 50.73 per cent stake in the company as of 31-Dec-2021, while FIIs owned 19.09 per cent, DIIs 9.16 per cent.