SRF Limited — Q3 FY26 earnings call

Call held 20 Jan 2026

Management summary

SRF reported a healthy Q3 FY26 with 6% revenue growth and 60% PAT expansion, primarily driven by strong performance in the Fluorochemicals segment. However, Specialty Chemicals and Performance Films faced headwinds from Chinese competition, pricing pressure, and demand deferrals. The company is strategically investing in new generation gases and expanding its pharma intermediate capacity to diversify its portfolio and mitigate risks.

Highlights

  • Gross operating revenue grew 6% to INR3,713 crore.

  • EBIT increased 23% year-on-year from INR529 crore to INR653 crore.

  • PAT expanded 60% year-on-year to INR433 crore.

  • Chemicals Business revenue grew 22% to INR1,825 crore, driven by higher refrigerant volumes and operational efficiencies.

  • Fluorochemicals business delivered a record quarter, supported by firm global HFC prices.

Concerns

  • Specialty Chemicals facing persistent pricing pressure from Chinese competitors, impacting financial performance.

  • Continued deferment in offtake for certain key products by agro majors.

  • Performance Films & Foils revenue declined 3% year-on-year.

  • Negative impact from forward positions on rupee-dollar hedges due to unprecedented rupee depreciation.

  • Technical Textiles (Belting Fabrics) under pressure due to aggressive Chinese pricing and reduced demand.

  • Coated Fabrics domestic demand soft, impacted by cheaper Chinese imports.

Key financials

  1. Gross Operating Revenue ₹3,713 Cr +6%YoY
  2. EBIT ₹653 Cr +23%YoY
  3. PAT ₹433 Cr +60%YoY

What they filed

Q1 FY27: revenue up 25.1%, net profit up 42.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,704 2,762 3,496 3,040 2,853 +6%2,952 +7%3,576 +2%3,802 +25%
EBITDA490 557 876 724 675 +38%743 +33%881 +1%949 +31%
Net profit225 280 513 397 363 +61%458 +64%507 −1%566 +43%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹3,621 Cr Total
  • Chemicals Business ₹1,825 Cr 50.4%
  • Performance Films & Foils ₹1,342 Cr 37.1%
  • Technical Textiles ₹454 Cr 12.5%

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Second pharma intermediate plant at Dahej site ₹180 Cr
    • First stage investments for new generation gases plant at Odisha site ₹1,500 Cr
    In light of this, we are adding a second pharma intermediate plant at an investment of INR180 crore to come up at our Dahej site, which is expected to be commissioned in the next 8 months.
  • Debt Debt disclosed
    On the finance side, the Board in its meeting today approved a second interim dividend of INR5 per share, entailing a cash outflow of INR148.21 crore. This follows the first interim dividend of INR4 per share declared on July 23, 2025.
  • Dividend ₹5/share (interim)
    On the finance side, the Board in its meeting today approved a second interim dividend of INR5 per share, entailing a cash outflow of INR148.21 crore. This follows the first interim dividend of INR4 per share declared on July 23, 2025.

Guidance & targets

Capex

  • Second pharma intermediate plant investment Capex · next 8 months (commissioning) · High confidence INR180 crore
    In light of this, we are adding a second pharma intermediate plant at an investment of INR180 crore to come up at our Dahej site, which is expected to be commissioned in the next 8 months.

    — Ashish Bharat Ram

  • First stage investments for Odisha site (new generation gases) Capex · FY27 · High confidence INR1,500-2,000 crore
    the first stage of investments in the Odisha site will probably be in the range of INR1,500 crore to INR2,000 crore. So in that sense, the capex for financial year '27 also remains on a strong wicket.

    — Ashish Bharat Ram

Segment Contribution

  • Pharma business share of total specialty chemicals Segment Contribution · long-term · Medium confidence at least 20%
    At the moment, broadly speaking, the pharma business is, maybe in the region of close to 10% of our total specialty chemicals business; and we've always said that we want this to go to atleast 20%.

    — Ashish Bharat Ram

New Product Launches

  • New Active Ingredient (AI) launches New Product Launches · FY26, FY27 · High confidence one in FY26, couple in FY27
    As things stand right now, we're pretty much on track for that. We believe the registration for one of them has happened, so we should see the launch in the coming year.

    — Ashish Bharat Ram

Capacity

  • New fluoropolymer plants (Chemours contract) Capacity · this calendar year · High confidence coming up
    So, Sanjesh, we will see the plants coming up in the course of this calendar year.

    — Ashish Bharat Ram

Growth

  • Specialty Chemicals growth Growth · this year (FY26) · High confidence fall short of 20%

    Previously 20% → fall short of 20%

    One last question on the Specialty Chemicals. At the start of the year, we expected a 20% growth in the overall chemicals segment. But within that, do you think this year, we will fall short of the 20% growth in specialty? For sure.

    — Ashish Bharat Ram

What to watch in Q4 FY26

Specialty Chemicals margin improvement

Q4 FY26
Current Facing persistent pricing pressure, margins impacted
Target Improved margins and better performance

Why it matters

Specialty Chemicals is a key segment facing headwinds; improvement signals recovery and validates management's strategy.

It's coming definitely from Specialty Chemicals. Like I said, the Specialty Chemicals business has had a more challenging time, so it has come from that. But I'm sure that we'll see a better performance in quarter 4.

Risks & concerns

  • Persistent pricing pressure from Chinese competitors in Specialty Chemicals

    high

    Irrational pricing from Chinese competitors impacting margins; SRF protecting market share and volumes.

    Management acknowledged

  • Continued deferment offtake for certain key agro products

    medium

    Agro majors delaying purchases, though signs of revival are emerging.

    Management acknowledged

  • Negative impact from rupee-dollar hedge positions due to rupee depreciation

    medium

    Unprecedented rupee depreciation negatively impacted forward positions, expected for a few more quarters.

    Management acknowledged

  • Volatility in US market for R32 due to tariff uncertainty

    medium

    Tariff situation makes business transactional rather than relationship-oriented, impacting buying behavior.

    Management acknowledged

  • Competitive pressure and cheaper imports in Performance Films & Foils

    medium

    Sustained competitive pressure from cheaper imports in international operations and soft domestic demand.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
Capex outlook for FY26 and FY27, especially for new generation gases Direct
the first stage of investments in the Odisha site will probably be in the range of INR1,500 crore to INR2,000 crore. So in that sense, the capex for financial year '27 also remains on a strong wicket.

Management confirms significant capex for new generation gases, aligning with previous guidance and highlighting long-term strategic focus despite global volatility.

Asked by Arjun Khanna

Dichotomy between Q4 Specialty Chemicals outlook and ongoing Chinese competition Partial
there is a lot of pent-up POs that have to be delivered in quarter 4. But the second part, which is about whether we are really seeing a big pickup, is where we are not 100% sure.

Clarifies that Q4 strength is due to deferred orders, not a fundamental shift in competitive landscape, indicating continued pricing pressure from China.

Asked by Arjun Khanna

Impact of Chinese mandate on BOPET/BOPP margins in Performance Films Direct
the mandate that was given, was to cut back on capacity by 20%. That happened in December, and as a result, we've already seen some increase in pricing. The mandate also says that post their Lunar holidays, they are supposed to cut back further on the capacity.

Provides specific details on Chinese government intervention in BOPET capacity, which has already led to price increases and could further improve margins for SRF.

Asked by Arjun Khanna

Confidence in Q4 ag chem pickup and order visibility Direct
When you have a subdued Q2, Q3, a lot of it is just pent-up POs that customers wanted delivery in this year. I think everybody is going through this phase, but nobody wants extra inventory on December 31.

Explains the Q4 ag chem recovery as a result of customers clearing inventory and fulfilling deferred orders, rather than a broad market recovery.

Asked by Jason Soans

Rationale and scaling of the second pharma intermediate plant Direct
we also want to derisk from agro. And a great example of why we want to do that, is, because of what we've seen happen over the last 2 years - that agro cycles can be quite vicious in their own way.

Highlights the strategic importance of pharma expansion for diversification and de-risking from agro-chemical cyclicality, indicating strong confidence in the pharma pipeline.

Asked by Jason Soans

Ability to divert R134a/R125 capacity to R32 Evasive
All I can say at this stage is that I would rather not comment on what our capacity is or isn't. That's something we believe is an important part of our strategy to create a baseline.

Management declines to provide specific details on capacity flexibility, suggesting it's a competitive secret or a sensitive strategic decision.

Asked by Abhijeet Akella

Impact of new R32 capacities given the quota regime Direct
it is the baseline production of 2024, 2025, 2026, that is going to give you the quotas going forward. India has always been a country that has abided by its commitment on any global platform.

Reiterates that R32 quotas are based on historical production, implying that new capacities without baseline production will not receive quotas, thus limiting their competitive impact.

Asked by Madhav Marda

Status and timeline of fluoropolymer supplies under the Chemours contract Direct
So, Sanjesh, we will see the plants coming up in the course of this calendar year. We are working very closely with their team. There is a lot of learning for us here because some of the equipments that we are having to put, are equipments we have never dealt with.

Confirms that new fluoropolymer plants for the Chemours contract are on track for commissioning this calendar year, indicating progress on a key strategic partnership.

Asked by Sanjesh Jain

2 min read 6 chapters

Detailed narrative

Robust Q3 FY26 Performance Despite Headwinds

SRF delivered a healthy performance in Q3 FY26, with gross operating revenue growing 6% to INR3,713 crore. EBIT saw a significant 23% year-on-year increase, reaching INR653 crore, up from INR529 crore in Q3 FY25. Net Profit After Tax (PAT) expanded by an impressive 60% year-on-year to INR433 crore, reflecting improved operational efficiency and disciplined cost management amidst global uncertainties.

Chemicals Business Driven by Fluorochemicals, Specialty Faces Pressure

The Chemicals Business reported a strong revenue growth of 22%, increasing from INR1,496 crore in Q3 FY25 to INR1,825 crore in Q3 FY26. This growth was primarily fueled by higher refrigerant volumes and enhanced operational efficiencies in Fluorochemicals, which had a record quarter. However, the Specialty Chemicals segment continued to face persistent pricing pressure from Chinese competitors, leading SRF to prioritize market share and volumes over aggressive pricing.

Strategic Expansion into Pharma Segment

To mitigate risks associated with the cyclical nature of the agro-chemical business, SRF is accelerating its expansion into the pharma segment. The company is investing INR180 crore in a second pharma intermediate plant at its Dahej site, which is expected to be commissioned within the next 8 months. This move aims to increase the pharma business's contribution to at least 20% of the total specialty chemicals portfolio, leveraging a robust pipeline of new molecules and growing customer base.

New Generation Gases and Odisha Site Development

SRF is making significant progress on its next-generation refrigerant gases project, which will be housed at a new site in Odisha. The company has applied for necessary regulatory clearances and anticipates initial investments of INR1,500 crore to INR2,000 crore for this site in FY27. This strategic investment aligns with the inevitable global transition to new generation gases under the Kigali Amendment, positioning SRF for long-term growth in this evolving market.

Performance Films & Foils Navigates Competitive Landscape

The Performance Films & Foils business experienced a 3% year-on-year revenue decline to INR1,342 crore, although EBIT improved slightly to INR95 crore from INR90 crore in Q3 FY25. This segment faced challenges from lower BOPET and BOPP volumes in the domestic market and sustained competitive pressure from cheaper imports in international markets. Encouragingly, recent Chinese mandates to cut BOPET capacity by 20% have led to some price improvement, with further cuts expected post-Lunar holidays.

Capital Allocation and Shareholder Returns

The Board approved a second interim dividend of INR5 per share, resulting in a cash outflow of INR148.21 crore, following a previous INR4 per share dividend. SRF maintains a strong capex outlook, with significant investments planned for the new pharma plant and the Odisha site for new generation gases. While global interest rate reductions are beneficial, the company noted a negative impact from rupee-dollar hedges due to unprecedented rupee depreciation, though a weak rupee is generally favorable for its export-oriented business.

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