SRF shares rally 7% on new capacity addition in Indore and Dahej

SRF has received approval from the board of directors for setting up a manufacturing facility for BOPP -- BOPE Film (including Metallizer) at Indore. The proposed capacity addition is 60,000 MTPA (Nameplate) on BOPP. The total investment required for said capacity addition is ₹445 crore. The rationale of this capacity addition is to explore expansion in business adjacencies. The said capacity is to be added in 25 months.

The board has also approved a project to set up new facilities to manufacture fourth-generation refrigerants at Dahej, Gujarat, or any other location found suitable by the Company, which will have an expected cost of around ₹1100 crore. The financing will be internal accruals and borrowings. These facilities aim to meet the future requirements of refrigerants with a significantly lower global warming potential (GWP) and help lower carbon footprint.

In the latest quarter, the company reported sluggish numbers across the board. Total operating revenue grew by 7.8% YoY to ₹3,424 crore compared to ₹3,177 crore. On the other hand, EBITDA declined by 11.8% YoY to ₹594 crore, while the EBITDA margins contracted by 400 bps to 17.3% for Q2FY25 compared to 21.2% in the previous year's similar quarter. Lastly, the net profit for the quarter declined by 33% YoY to ₹201 crore in Q2FY25 from ₹300 crore in Q2FY24.

The Board of Directors at its meeting held on October 22, 2024, has approved the same.

SRF is a leader in refrigerants, engineering plastics, and industrial yarns in India. The company also manufactures polyester films and fluoro specialties. In addition to India, SRF has a presence in Dubai, South Africa, and Thailand.