SRF Reports 37% Dip In Q2 Profits, Unveils ₹235 Crore Capex Plan For New Gujarat Facility

SRF Ltd, a prominent chemical manufacturing company, faced a 37% decline in consolidated net profit for the quarter ending in September, as reported on Friday. The net profit plummeted to Rs 301 crore, a significant drop from Rs 481 crore during the same period last year.

The company's total revenue, or topline, also witnessed a notable 14.8% year-on-year reduction, falling from Rs 3,727 crore to ₹3,177 crore for the July-September period. These results came as a surprise and dampened expectations for the company's performance.

In addition to the profit and revenue dip, SRF's operating performance during the quarter was notably weaker than expected. The operating profit, or EBITDA, stood at Rs 625 crore, and the EBITDA margin for the quarter was 19.7%. Compared to the previous year, EBITDA saw a nearly 19% decrease, and the margin contracted by 90 basis points.

However, amidst these challenges, SRF unveiled a promising new project. The company's board approved the establishment of a cutting-edge facility in Dahej, Gujarat. This new facility will focus on producing agrochemical intermediates. To bring this project to life, SRF will invest Rs 235 crore in capital expenditures, which will be financed through a combination of debt and internal accruals.

The market reacted positively to this capex plan, with SRF's stock surging by 3.45% following the result announcement. As a result, the stock was trading at Rs 2,175.95 on the National Stock Exchange (NSE), marking a 3.30% increase from the previous day.

SRF Ltd, established in 1970, is a chemical-based multi-business entity with an annual turnover of Rs 8,295 crore. The company boasts a diversified business portfolio encompassing fluorochemicals, specialty chemicals, packaging films, technical textiles, and coated and laminated fabrics. It operates 11 manufacturing plants in India, with additional facilities in Thailand, South Africa, and Hungary.