Motilal Oswal - SRF (SRF) MOSL: SRF (Neutral) - Beat on estimates led by Technical Textiles

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Motilal Oswal

Sumant Kumar

EUR 120.00 For Business Accounts Only

MOSL: SRF (Neutral) - Beat on estimates led by Technical Textiles

SRF: Beat on estimates led by Technical Textiles

(SRF IN, Mkt Cap USD6.3b, CMP INR7926, TP INR7230, 9% Downside, Neutral)

SRF reported a strong operating performance on a YoY basis in 1QFY22, on a lower base in 1QFY21, led by margin expansion in Technical Textiles and Chemicals, but offset by a contraction in Packaging Films. Margin in the Chemicals segment contracted QoQ due to higher raw material prices and export freight rates.
SRF’s reported EBIT was higher v/s our estimate. The incremental EBIT of 60%/22% over our estimate was mainly contributed by Technical Textiles/Packaging Films, while the rest is from the Chemicals segment.
Factoring in its 1QFY22 performance and margin improvement in the Technical Textiles segment, we have increased our earnings estimates for FY22E by 12% and maintained the same for FY23E.
We are encouraged by the long term structural opportunity in the Chemicals sector. We maintain our Neutral stance on SRF owing to higher valuations, which seem to fully price in the near term upside

30/07/2021 14 EN

Underlying

SRF

SRF three main lines of business are industrial synthetics, industrial fabrics, and chemicals. Industrial synthetics business includes nylon industrial yarn and nylon tyre cord fabric. Industrial fabrics business includes belting fabrics and coated fabrics. Chemicals business includes fluorochemicals and chloromethanes. Through its subsidiaries, Co. manufactures synthetic cords and industrial fabrics, trading in certain specified items in the Jebel Ali Free Zone, Dubai. In addition, Co.'s subsidiaries are engaged in investment holding and in the marketing of imports to the U.S.

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INE647A01010 National Stock Exchange of India India

Provider

Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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Analysts

Sumant Kumar

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MOSL: SRF (Neutral) - Beat on estimates led by Technical Textiles

SRF sees a downgrade to Neutral on account of less fundamental stars

Monthly LMI Update Independent Investment Research

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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