The EBITDA margins of SRF are likely to moderate as the benefit from the operating leverage gets blunted by the margin contraction in the packaging business
PRO Only Highlights
– Quarterly performance largely backed by improved realisations
– Medium-term triggers China plus and protectionist measures for tyre industry
– Valuations not inexpensive; but improved medium-term outlook
The stock of SRF (CMP: Rs 10,172; Market Cap: Rs 60,259 crore) has had a strong run post the second wave of COVID. The recovery theme has played out disproportionately for large players like SRF, particularly in the technical textile segment. Superior execution in chemicals has continued, though there has been some adverse impact of freight cost lately. The underlying trend of “China plus one” is seen at various end-markets, specialty intermediates in both agro and pharma end-markets, and…
