SRF Q3FY23 net profit rises by 1 percent

SRF jumped 2.63% to INR 2,186.40 after the specialty chemical maker’s consolidated net profit rose marginally to INR 510.90 crore in Q3 FY23 as against INR 505.54 crore posted in Q3 FY22.

Revenue from operations stood at INR 3,469.66 crore in the quarter ended 31 December 2022, registering a growth 3.7% on YoY basis. The chemicals business reported an increase of 23% in its segment revenue to INR 1,757 crore from INR 1,428 crore during Q3 FY23 over CPLY. The company said that during the quarter, the specialty chemicals business performed exceedingly well on account of strong demand for certain key products and their derivatives from the overseas markets and higher capacity utilization of dedicated/multipurpose facilities. Several new plants commissioned during the year contributed to the overall performance.

The fluorochemicals business had a healthy quarter owing to higher prices of certain key refrigerant products in critical international markets and increased domestic volumes of HFC’s and blends. In addition, healthy contribution from the chloromethanes segment augmented the overall results, added the company.

The packaging films business reported a decline of 6% in its segment revenue to INR 1,203 crore from INR 1,276 crore during Q3 FY23 when compared with CPLY. The company that this arm faced head winds on account of significant supply addition in BOPET and BOPP film segments in India, global demand slowdown and steep energy costs in Europe. Pressure on margins is expected to continue as excess supply scenario in BOPET is unlikely to change in the short term.

The technical textiles business reported a decline of 21% in its segment revenue to INR 426 crore from INR 538 crore during Q3 FY23 over CPLY. SRF said that demand for nylon tyre cord fabric and polyester industrial yarn remained weak during the quarter. Overall, the business continued to focus on operating efficiencies and running plants optimally.

The other businesses reported a decline of 14% in its segment revenue to INR 92 crore from INR 107 crore in Q3 FY23 when compared with CPLY. Both the coated and laminated fabrics business performed in line with expectations in a difficult external environment, said the company. Earnings before interest and tax (EBIT) declined 9% to INR 726 crore in Q3 FY23 when compared with corresponding period last year (CPLY).

The company’s profit before tax decreased 13.60% to INR 630.93 crore in Q3 FY23 from INR 730.28 crore recorded in same period a year ago. The board has approved a project for setting up a range of specialty fluoropolymers at Dahej at a projected cost of INR 595 crore. The project is expected to be commissioned in 24 months.

Further, the company’s board has also approved a project for setting up a new and dedicated facility to produce an agrochemical intermediate at Dahej at a projected cost of INR 110 crore to meet the growing demand for the product i In the future. This project is expected to be commissioned in 10 months. In addition, to cater to the growing requirements of new and upcoming plants at Dahej, the board of directors has approved a project to create a structure for a new plant building at a projected cost of INR 40 crore.

As of 31 December 2022, the company has applied for 398 patents, with 20 patents applied during the quarter. Till date, the company has been granted 130 patents globally.

Meanwhile, the board has also approved a second interim dividend of INR 3.60 per equity share. The record date for the same purpose has been fixed on 7 February 2022 and the payment of dividend will be on 28 February 2022.

Ashish Bharat Ram, chairman and managing director said, In spite of the expected weakness in our packaging films and technical textiles businesses, the company has done well. The performance of our chemicals business remains strong and the continuing investments in this segment are a testament to our confidence going forward.

SRF is a chemical based multi-business entity engaged in the manufacturing of industrial and specialty intermediates. The company’s diversified business portfolio covers fluorochemicals, specialty chemicals, packaging films, technical textiles, coated and laminated fabrics.