SRF shares fall on weak PAT, management commentary on competition from Chinese players

Shares of SRF fell over 3% on Wednesday after the company reported a 25% year-on-year (YoY) decline in its fourth-quarter (Q4) consolidated net profit at ₹422 crore.

The management commentary about the firm witnessing severe competition from Chinese players also appears to have put pressure on the stock. SRF reported a 6% YoY decline in its Q4 operating revenue at ₹3,570 crore.

For the fiscal year 2024, SRF’s revenue fell 12% YoY to ₹13,139 crore while the company’s net profit decreased 38% YoY to ₹1,336 crore.

Ashish Bharat Ram, Chairman and Managing Director of the firm said that while the general performance has been weak, the company has seen a reasonable recovery in its chemicals business in the fourth quarter. “We believe that this recovery will pick up pace in the second half of FY25,” he said.

The company’s chemicals business reported a decline of 14% in its segment revenue at ₹1,816 crore. SRF said the specialty chemicals business continued to face headwinds due to inventory rationalisation by certain key customers. “In addition, a lot of capacity has come up in China, leading to pricing pressure on intermediate products,” it said.

Meanwhile, the performance of the fluoro-chemicals business was adversely impacted owing to the Chinese dumping of refrigerants in India and the international markets, leading to pricing pressure and some impact on volumes, the firm stated. In addition, sluggish growth in the agrochemical and pharmaceutical industries adversely impacted the demand for some key industrial chemicals, it said.

The company’s packaging films business reported an increase of 3% in its segment revenue at ₹1,182 crore during the quarter. The technical textiles business reported an increase of 9% in its segment revenue at ₹469 crore during Q4FY24.

Shares of the company have lost over 5% since the beginning of the year. The stock has declined by over 8% in the last one year.