Specialty Chemicals Stock Gave Over 500% Return In 5 Yrs, Buy For 24% Upside, Says BP Wealth

Brokerage firm BM Wealth has a "Buy" on SRF Ltd., a large-cap specialty Chemicals stock. It has assigned a target price of Rs 2,803 apiece, likely to give a return of up to 24% if purchased at the current market price. SRF Limited is a chemical-based multi-business entity engaged in the manufacturing of industrial and specialty intermediates. The company is one of the leading producers of fluorine-based specialty chemicals, catering mainly to the agrochemical and pharmaceutical segments. Check below to know more:

SRF's Stock Performance & Returns

The stock last traded at Rs 2,272.40 apiece, down 1.43% from its previous close. It hit the 52 week low on 6 July 2022 at Rs 2,002.20 apiece and 52 week high on 14 September 2022 at Rs 2,865 apiece, respectively.

The stock has fallen .52% in 1 week, and 5.34% in the past 3 months, respectively. It has fallen 6.1% in the past 1 year. It gave a multibagger return of 219.38% in 3 years and 505.09% in 5 years, respectively.

Buy for a target price of Rs 2,803/share

According to BP Wealth, SRF is one of the leading producers in the fluorine-based specialty chemicals space, and is likely to clock superior ROCE of 22.1% and ROE of 18.9% by FY25E. SRF is in a sweet spot to most of its peers, both in terms of profitability and growth profile led by higher contributions from the chemical business.

BP Wealth said, "We expect Rev/EBITDA/PAT to grow at 16.4%/16.8%/17.8% CAGR over FY22-25E led by (1) significant investments in the chemical and packaging business, (2) strong execution track record, (3) diversification into high growth areas and (4) higher consumption of fluoro compounds across agrochemical and pharma sector."

It added, "We, thus, expect SRF to generate stable revenues over the long term and is trading at a PE of 27.2x/22.2x on FY24e/25e EPS estimates. We value the company at 27x FY25e EPS and arrive at a TP of Rs 2,803, implying an upside of 21%. We, thus, initiate coverage on SRF and ascribe a BUY rating on the stock."

Disclaimer

The stock has been picked from the brokerage report of BM Wealth. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.