During Friday’s trading session, the shares of a chemical-based multi-business entity engaged in the manufacturing of industrial and specialty intermediates slumped by around 6 percent to Rs. 2,513.15 on BSE, following the clarification on the US refrigerant gas price increase.
With a market cap of Rs. 77,147.5 crores, at 12:29 p.m., the shares of SRF Limited were trading in the red at Rs. 2,602.6, down by around 2.6 percent, as compared to its previous closing price of Rs. 2,672.25.
What’s the News
According to the recent filings on the stock exchanges, SRF Limited announced that the recent price hike reported by a US refrigerant gas distributor pertains specifically to the US market.
The company noted that fluctuations in the prices of refrigerant gases for SRF would depend on the demand and supply dynamics within the company’s relevant market segment.
Earlier Reported News
On 9th January, the shares of SRF Limited hit a 10 percent upper circuit, marking their third consecutive day of gains. This surge followed a CNBC Awaaz report stating that US gas distributors had announced a significant price hike for refrigerant gases. IGas USA revealed that the supply of key refrigerants R32 and R125 was impacted, prompting a price increase of up to 200 percent.
According to a report by brokerage firm Equirus, any increase of $1 per kilogram in the realisation of the R32 refrigerant could boost SRF’s EBITDA by ~Rs. 260 crore. Presently, SRF has a production capacity of nearly 30,000 tonnes for R32 and around 7,000 tonnes for R125.
R32 refrigerant is widely used in air conditioning systems and low-temperature refrigeration, where it plays a critical role in absorbing heat and generating cool air. Similarly, R125 is utilized in air conditioning, refrigeration, and other industrial applications, making both refrigerants essential components in their respective markets.
Financials & Capex
SRF Limited reported a marginal growth in revenue from operations, experiencing a year-on-year increase of nearly 7.8 percent, rising from Rs. 3,177 crores in Q2 FY24 to Rs. 3,424 crores in Q2 FY25.
However, during the same period, the company’s net profit decreased from Rs. 301 crores to Rs. 201 crores, representing a decline of around 33 percent YoY.
EBITDA for Q2 FY25 decreased by about 12 percent YoY to Rs. 594 crores, down from Rs. 674.4 crores in Q2 FY24, while the EBITDA margins fell to 17.3 percent, from 21.2 percent, over the same period.
In Q2 FY25, the company’s Board approved a project to establish production facilities for fourth-generation refrigerants, which have a notably lower Global Warming Potential (GWP) and carbon footprint, at an estimated cost of Rs. 1,100 crores. The project is anticipated to be completed in about 30 months.
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Key Financial Ratios
In terms of key financial metrics, SRF Limited has a Return on Equity (RoE) of 12.2 percent and a return on capital employed (RoCE) of 12.7 percent. Additionally, the company’s debt-to-equity ratio stands at 0.44.
Stock Performance
The stock has delivered positive returns of nearly 13.6 percent in one year, as well as around 8.7 percent returns in the last six months. Likewise, the shares of SRF Limited have given positive returns of about 11.2 percent in the last one month.
About the Company
SRF Limited is primarily engaged in the business of manufacturing, purchasing and sale of technical textiles, chemicals, packaging films and other polymers. Its diversified business portfolio covers fluorochemicals, specialty chemicals, packaging films, technical textiles and coated and laminated fabrics.
The company is a domestic market leader in Tyre Cord manufacturing and Belting Fabrics. It holds ~40 percent share in India’s Nylon Tyre Cord market and is the 5th largest global player in this industry. Additionally, it is the second-largest manufacturer of Conveyor Belting Fabrics worldwide.
Written by Shivani Singh
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