SRF gains 4% post analysts' day meet; Jefferies maintains 'Underperform'

Shares of specialty chemicals player SRF Ltd. in Thursday's trade (February 27) gained nearly 4 per cent to Rs 2864.35 per share on the BSE, while on the NSE it scaled Rs 2,864.5 per share level.

The spurt in the company's stock price came following its analyst day meeting wherein it underscored that the worst is over for all of its businesses including, technical textiles, chemicals, fluorochemicals, and packaging film.

Key takeaways from SRF's analysts' day meeting

• ​The company's specialty chemicals business is expected to remain flat to positive in FY25, with growth anticipated from FY26.
• Pharma business is, however, anticipated to stage good growth.
• The company's packaging film business is showing signs of revival.
• Commercialization of new Agrochem and Pharma products is set to begin and this will likely offset the pricing pressure on old products.
• 5-7 new active ingredients are in the pipeline and these will be launched in the next 2-3 years.
• No major change is expected in the refrigerant gas prices. In January this year, the company clarified that price changes in its market shall be determined based on the market forces of supply and demand. "...the company considers it necessary to clarify to the Stock Exchanges that the reported price hike by a US refrigerant gas distributor is in the context of the US market. Changes in prices of refrigerant gases for SRF will remain a function of demand and supply in our relevant market segment," SRF said in a regulatory filing.
• The company also pointed out that renegotiation led to the decline in export prices of refrigerant gas.

Jefferies' view on SRF

The global brokerage maintains an 'underperform' call on the stock with the target pegged at Rs 2,060 per share, implying a potential downside of over 25 per cent from the previous day's close.