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    SRF

    SRF
    Chemicals·20 Jan 2026
    Management Summary

    SRF delivered a robust Q3 FY26, with significant growth in EBIT and PAT, primarily driven by strong performance in the Chemicals Business, especially Fluorochemicals. Despite facing headwinds like persistent Chinese pricing pressure in Specialty Chemicals and demand deferment in agrochemicals, the company maintained momentum through operational excellence and strategic investments. SRF is confident about future opportunities, supported by a strong pipeline and ongoing capacity expansion for new generation gases and pharma intermediates.

    Highlights

    5

    • Gross operating revenue grew 6% to INR3,713 crore, demonstrating healthy performance across key business segments.

    • EBIT was up 23% year-on-year from INR529 crore to INR653 crore, reflecting a margin of 18%.

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

    • Chemicals Business reported a revenue growth of 22%, increasing from INR1,496 crore in Q3 FY25 to INR1,825 crore in Q3 FY26, driven by higher refrigerant volumes and enhanced operational efficiencies.

    • Fluorochemicals business delivered a record quarter on all counts, supported by firm global HFC prices and China's quota-led supply restrictions.

    Concerns

    5

    • Specialty Chemicals business faced persistent pricing pressure from customers, driven by irrational pricing from Chinese competitors.

    • Continued deferment in offtake for certain key agro products was observed.

    • Performance Films & Foils business reported a revenue decline of 3% year-on-year to INR1,342 crore due to lower BOPET and BOPP volumes in the domestic market.

    • Technical Textiles and Other businesses (Coated Fabrics, Laminated Fabrics) experienced pressure from aggressive Chinese pricing and cheaper imports, impacting margins.

    • Forward positions on rupee-dollar hedges had a negative impact due to unprecedented rupee depreciation, expected to continue for a few more quarters.

    Key financials

    Single quarter

    04 metrics
    1. 01Gross Operating Revenue₹3,713 Cr+6%YoY
    2. 02EBIT₹653 Cr+23%YoY
    3. 03EBIT Margin18%
    4. 04PAT₹433 Cr+60%YoY

    Segment breakdown

    • Chemicals Business₹1,825 Cr50.4%
    • Performance Films & Foils₹1,342 Cr37.1%
    • Technical Textiles₹454 Cr12.5%
    Donut· Share of Revenue

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Capex

    ₹1,500 crores

    Dividend

    ₹5/share (interim)

    Guidance & targets

    5
    CategoryTargetPriority
    Capex
    Odisha site investment (first stage)
    INR1,500-2,000 crore
    		High
    Capacity
    Second pharma intermediate plant commissioning
    Commissioned
    		High
    Product Launch
    AI launch
    One AI
    		High
    Product Launch
    AI launch
    Couple of AIs
    		High
    Product Mix
    Pharma business contribution to Specialty Chemicals
    at least 20%
    		Medium

    Second Pharma Intermediate Plant Commissioning

    within 8 months
    CurrentUnder construction at Dahej
    TargetCommissioned

    Why it matters

    This plant is crucial for expanding the pharma segment, de-risking from agrochemicals, and supporting the growing pipeline of new molecules.

    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.

    How to verify

    guidance_and_targets[metric='Second pharma intermediate plant commissioning']

    Risks & concerns

    8
    RiskSeverity

    Persistent pricing pressure from Chinese competitors in Specialty Chemicals

    Irrational pricing from Chinese competitors is impacting core product categories, though management believes it's unsustainable in the long run. — Management acknowledged

    high

    Continued deferment in offtake for certain key agro products

    Agrochemicals demand was subdued, but management sees signs of revival and a strong pipeline for the coming quarter. — Management acknowledged

    medium

    Negative impact from rupee depreciation on forward hedges

    Unprecedented rupee depreciation has negatively impacted forward hedges, expected to continue for a few more quarters, though a weak rupee is generally favorable. — Management acknowledged

    medium

    Volatility in US market due to tariff uncertainty impacting R32

    Tariff uncertainty in the US market for R32 makes customers hesitant, leading to more transactional buying rather than long-term contracts. — Management acknowledged

    medium

    Competitive pressure from cheaper imports in Performance Films (Thailand and Hungary)

    International operations in Thailand and Hungary continued to be affected by sustained competitive pressure from cheaper imports. — Management acknowledged

    medium

    Aggressive Chinese pricing and decline in demand for Belting Fabrics

    Belting Fabrics came under pressure due to aggressive Chinese pricing and reduced conveyor belt exports to the U.S. — Management acknowledged

    medium

    Impact of cheaper Chinese imports on Coated Fabrics

    Domestic demand for Coated Fabrics was soft, with volumes impacted by cheaper Chinese imports. — Management acknowledged

    medium

    Pricing pressure in Laminated Fabrics due to withdrawal of minimum import pricing

    Withdrawal of minimum import pricing on textile imports has intensified pricing pressure, with margins likely to stay under strain. — Management acknowledged

    medium

    Q&A highlights

    7

    “I believe that when we actually get down to it, 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.”

    Clarifies the significant capex plans for the new Odisha site, focusing on new generation gases, and confirms the company's commitment to this strategic transition despite global volatility.

    asked by Arjun Khanna

    2 min read6 chapters

    Detailed Narrative

    01

    Q3 FY26 Financial Performance Overview

    SRF delivered a healthy performance in Q3 FY26, with gross operating revenue growing 6% to INR3,713 crore. EBIT increased by 23% year-on-year to INR653 crore, achieving an 18% margin. The company's PAT expanded significantly by 60% year-on-year to INR433 crore, demonstrating resilience amidst a dynamic and challenging global environment. This strong financial outcome was supported by operational excellence and disciplined cost management.

    02

    Chemicals Business: Growth and Headwinds

    The Chemicals Business reported a robust revenue growth of 22%, reaching INR1,825 crore in Q3 FY26, up from INR1,496 crore in the prior year. This growth was primarily driven by higher refrigerant volumes and enhanced operational efficiencies in both Fluorochemicals and Specialty Chemicals. However, the Specialty Chemicals segment faced persistent pricing pressure from irrational Chinese competition and continued deferment in offtake for certain agro products, though management expects a strong Q4 due to pent-up demand.

    03

    Fluorochemicals: Record Quarter and Future Outlook

    The Fluorochemicals business achieved a record quarter, benefiting from firm global HFC prices and China's quota-led supply restrictions. The domestic market is also showing signs of recovery after a weak first half. SRF is well-positioned to maximize its production quota under the Kigali framework. The company's next-generation refrigerant gases project, including a new site in Odisha, is progressing well, with regulatory clearances expected in the near future.

    04

    Performance Films & Foils: Revenue Decline with Margin Improvement

    The Performance Films & Foils business recorded a 3% year-on-year revenue decline to INR1,342 crore in Q3 FY26, primarily due to lower BOPET and BOPP volumes in the domestic market, partly impacted by GST 2.0. Despite the revenue dip, EBIT for the segment improved to INR95 crore from INR90 crore in Q3 FY25. Management noted signs of recovery in the domestic market from December and observed price improvement in BOPET from China due to mandated capacity cuts.

    05

    Strategic Focus on Pharma and De-risking from Agro

    SRF is strategically expanding its pharma segment to diversify and de-risk from the cyclical agrochemicals business. The pharma business currently contributes approximately 10% to the Specialty Chemicals segment, with a long-term target to reach at least 20%. To support this growth, a second pharma intermediate plant is being established at the Dahej site with an investment of INR180 crore, expected to be commissioned within the next 8 months, reflecting strong momentum in new molecule and customer development.

    06

    Capital Expenditure Plans and Shareholder Returns

    The company maintains a strong capex outlook, with the first stage of investments for the new Odisha site, focused on new generation gases, estimated at INR1,500-2,000 crore for FY27. This is in addition to the INR180 crore for the second pharma plant. The Board approved a second interim dividend of INR5 per share, resulting in a cash outflow of INR148.21 crore, following a prior interim dividend of INR4 per share. SRF also highlighted its R&D leadership with 506 patent applications and 153 granted patents.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.