SRF Ltd slumps 6 per cent despite double-digit growth in Q2FY22

With an increase in prices of key raw materials and logistics costs and various challenges linked to supply chain disruptions, the company was able to deliver good numbers.

In Q2FY22, on a consolidated basis, the company’s revenue stood at Rs 2,843 crore, an increase of 35 per cent on a YoY basis. EBIT increased by 19 per cent YoY to Rs 570 crore. However, the EBIT margin for the quarter contracted by 270 bps YoY and stood at 19.58 per cent. This was mainly due to a disproportionate increase in COGS to sales. The PAT came in at Rs 383 crore, representing a 21 per cent increase on a YoY basis. Similarly, the PAT margins also contracted by 150 bps YoY and stood at 13.47 per cent. 

Segment breakup 

1)The Chemicals Business reported a YoY increase of 28 per cent in its segment revenue from Rs 881 crore to Rs 1,126 crore during Q2FY22, which contributed 40 per cent of the total revenue. 

2)The Packaging Films Business reported an increase of 29 per cent in its segment revenue from Rs 833 crore to Rs 1,076 crore during Q2FY22, which contributed 38 per cent of the total revenue. 

3)The Technical Textiles Business reported an increase of 68 per cent in its segment revenue from Rs 332 crore to Rs 558 crore during Q2FY22, which contributed 19 per cent of the total revenue. 

Operating margin analysis 

1)The operating profit of the Chemicals Business increased 44 per cent from Rs 174 crore to Rs 251 crore in Q2FY22, operating margin stood at 22.2 per cent with a YoY increase of 245 bps.  

2)The operating profit of the Packaging Films Business declined (27 per cent) from Rs 246 crore to Rs 181 crore in Q2FY22, operating margin stood at 16.8 per cent with a significant YoY decrease of 1100 bps. 

3)The operating profit of the Technical Textiles Business increased 165 per cent from Rs 50 crore to Rs 133 crore in Q2FY22, operating margin stood at 23.8 per cent with a YoY increase of 880 bps. 

Commenting on the results, Managing Director, Ashish Bharat Ram said, “This has been another good quarter for the company. Although we have witnessed an increase in prices of key raw materials and logistics costs due to many domestic and international factors, and despite various challenges linked to COVID-19 and supply chain disruptions, we were able to deliver good numbers.” 

Established in 1970, SRF Limited with an annual turnover of Rs 8,295 crore (USD 1.1 billion) is a chemical-based multi-business entity engaged in the manufacturing of industrial and speciality intermediates. 

The share closed at Rs. 2,082.60, with 6 per cent down on Monday, October 25, 2021.