1. At a Glance
SRF Ltd is that rare breed of old-school industrial giant trying to cosplay as a high-growth startup. From packaging films to refrigerants, it does everything… except justify its 76x P/E. But wait, maybe it can.
2. Introduction with Hook
If Reliance is the Ambani of everything, SRF is the overachiever kid in the science lab—playing with chemicals, plastics, foils, and refrigerants while topping every exam… until FY24’s profit slump.
- ₹95,599 Cr Market Cap.
- FY25 Net Profit: ₹1,251 Cr (down from ₹2,162 Cr in FY23—ouch).
- P/E: 76.5 (because value investors cried and growth bros clapped).
3. Business Model (WTF Do They Even Do?)
SRF is not just one company—it’s three avatars in disguise:
- Specialty Chemicals (Cash Cow 1)
Agrochemicals, pharma intermediates, fluorochemicals = High-margin heaven. - Packaging Films (Cash Cow 2, now on a diet)
BOPET & BOPP films = mass usage + global competition = low margins. - Technical Textiles (Legacy Biz)
Nylon/Polyester fabric for tyres, belts. Basically, industrial Band-Aids. - Refrigerants/Aluminium Foils (New Toys)
Catering to HVAC + pharma packaging.
Revenue split:
- Chemicals ~45%
- Packaging ~35%
- Rest from textiles, foils, etc.
4. Financials Overview
| ₹ Cr | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|
| Revenue | 12,434 | 14,870 | 13,139 | 14,693 |
| Net Profit | 1,889 | 2,162 | 1,336 | 1,251 |
| OPM % | 25% | 24% | 20% | 18% |
| ROE % | 15% | 17% | 10% | 10.4% |
The company is still profitable—but margins and growth have taken a chemical bath recently.
5. Valuation
- P/E: 76.5
- Book Value: ₹426
- Price/BV: 7.57x
- EPS (FY25): ₹42.2
Method 1: P/E Method (Normalize EPS to ₹50–₹60)
Fair Value Range = ₹1,800 – ₹2,400 (P/E 36x to 48x)
Method 2: EV/EBITDA (Avg EV/EBITDA 20x on FY25 EBITDA ₹2,718 Cr)
Implied EV = ₹54,360 Cr → FV = ₹1,900/share approx.
Blended Fair Value Range: ₹1,900 – ₹2,400
Current Price: ₹3,224 = P/E madness unless future earnings double.
6. What’s Cooking – News, Triggers, Drama
- Capex Galore: ₹1,500 Cr+ new facility spend in FY25
- IT Dept Drama: ₹130 Cr tax demand withdrawn. SRF won the case.
- Cooling Business (Refrigerants): Big bet on India’s HVAC boom.
- Agrochemical Exports expected to rise FY26
- Concern: Flat PAT for 3 quarters + margin stress = Market is jittery.
7. Balance Sheet
| Item | Mar 2025 (₹ Cr) |
|---|---|
| Equity Capital | 297 |
| Reserves | 12,329 |
| Borrowings | 4,726 |
| Other Liabilities | 4,169 |
| Total Liabilities | 21,521 |
| Fixed Assets | 13,720 |
| CWIP | 811 |
| Investments | 827 |
Key Takeaways:
- Balance sheet is asset-heavy—₹13,720 Cr in plant and equipment.
- Debt is rising (₹4,726 Cr), funding capex and expansions.
8. Cash Flow – Sab Number Game Hai
| Year | CFO | CFI | CFF | Net Cash |
|---|---|---|---|---|
| FY23 | ₹2,902 Cr | ₹(2,964) Cr | ₹220 Cr | ₹158 Cr |
| FY24 | ₹2,094 Cr | ₹(2,231) Cr | ₹(72) Cr | ₹(209) Cr |
| FY25 | ₹2,487 Cr | ₹(1,482) Cr | ₹(1,071) Cr | ₹(65) Cr |
- Operating cash flow remains strong.
- Heavy investment in capacity = negative FCF.
- Financing outflow = debt repayment + dividends.
9. Ratios – Sexy or Stressy?
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE % | 22% | 13% | 12% |
| ROE % | 17% | 10% | 10.4% |
| OPM % | 24% | 20% | 18% |
| Payout % | 10% | 16% | 17% |
| Inventory Days | 112 | 127 | 111 |
Verdict: Ratios went from fab to meh. Still profitable, but not the ROE monster it once was.
10. P&L Breakdown – Show Me the Money
| Year | Revenue | OPM % | Net Profit | EPS |
|---|---|---|---|---|
| FY22 | ₹12,434 Cr | 25% | ₹1,889 Cr | ₹63.7 |
| FY23 | ₹14,870 Cr | 24% | ₹2,162 Cr | ₹72.9 |
| FY24 | ₹13,139 Cr | 20% | ₹1,336 Cr | ₹45.1 |
| FY25 | ₹14,693 Cr | 18% | ₹1,251 Cr | ₹42.2 |
Margins fell, profits dipped. EPS peaked in FY23 and is now ~42.
11. Peer Comparison
| Company | CMP (₹) | P/E | ROE % | OPM % | PAT (₹ Cr) | Revenue (₹ Cr) |
|---|---|---|---|---|---|---|
| SRF Ltd | 3,224 | 76.5 | 10.4 | 18% | 1,251 | 14,693 |
| Deepak Fert | 1,602 | 21.7 | 16.0 | 18.7% | 934 | 10,274 |
| GHCL | 624 | 10.0 | 18.6 | 27.6% | 601 | 3,183 |
| GNFC | 551 | 13.5 | 7.1 | 7.8% | 597 | 7,892 |
Takeaway: SRF is priced like a tech IPO, but delivers like a mature industrial. Valuation needs growth revival.
12. Miscellaneous – Shareholding, Promoters
| Category | Mar 2025 |
|---|---|
| Promoters | 50.26% |
| FIIs | 18.28% |
| DIIs | 18.42% |
| Public | 13.01% |
- Stable promoter holding
- Institutional love: DII and FII both hold 18%+
- Public holding keeps sliding—smart money rotating?
13. EduInvesting Verdict™
SRF is the kind of industrial compounder that built India’s capex boom—but it now trades like it’s building AI chips. The chemistry’s there, but the market’s already high on fumes.
Margins are under pressure, PAT is stagnating, and the capex cycle is still digesting. A re-rating only makes sense if FY26 sees margin expansion and specialty chemicals boom again.
For now: a high-quality business. Just maybe not at this high a price.
Metadata
– Written by EduInvesting Research Desk | July 15, 2025
– Tags: SRF Ltd, Chemicals, Specialty, Packaging, Capex Cycle, High PE Stocks, Q1FY26, Industrial Compounding
