SRF Ltd Share Price Target 2024, 2025 to 2030

Over the last five years, SRF Ltd has exhibited a commendable financial performance. The company’s sales have shown consistent growth, escalating from ₹7,100 crores in March 2019 to ₹14,870 crores in March 2023. Despite a marginal decrease in the operating profit margin (OPM) to 22% in the trailing twelve months (TTM), SRF Ltd has maintained a robust operational efficiency, with OPM ranging between 22% and 25%. Other income, though fluctuating, has contributed positively to overall profits.

While interest expenses have been effectively managed, with a decrease from ₹198 crores in March 2019 to ₹205 crores in March 2023, the recent increase to ₹273 crores in TTM requires careful examination. The company’s depreciation expenses have gradually risen, suggesting potential investments in assets. It will be essential for SRF Ltd to allocate capital efficiently and evaluate projects prudently to sustain profitability.

The Profit Before Tax (PBT) has seen substantial growth, reaching ₹2,824 crores in March 2023 from ₹818 crores in March 2019, indicating robust operational performance. The tax efficiency, with a tax rate ranging from 22% to 27%, has been maintained, except for the zero percent tax in March 2020, possibly attributable to a unique circumstance or a tax benefit.

The net profit has consistently grown, resulting in an increasing Earnings Per Share (EPS) from ₹22.33 in March 2019 to ₹72.95 in March 2023. SRF Ltd’s financial condition reflects a positive trajectory, but ongoing scrutiny of interest expenses and prudent capital allocation will be crucial for sustaining and enhancing its profitability in the future.

SRF Ltd, incorporated in 1970, is a diversified company engaged in manufacturing and selling technical textiles, chemicals, packaging films, aluminum foils, and other polymers. One of its key segments is the Chemicals Business, which includes Fluorochemicals and Speciality Chemicals.

The Fluorochemicals Business (FCB) contributes to revenue through the sale of refrigerants, pharma propellants, and industrial chemicals. SRF is a domestic market leader in refrigerants and has expanded its market share with the introduction of the new chemical ‘F 600a’. The Speciality Chemicals segment focuses on agrochemicals and pharmaceuticals, showcasing expertise in Fluorination chemistry and launching new intermediaries.

Financially, SRF Ltd has shown robust growth in sales, operating profit, and net profit over the last five years. The Compound Annual Growth Rate (CAGR) for sales and profit is noteworthy, indicating consistent performance. The company’s return on equity (ROE) and return on capital employed (ROCE) stand at 22.8% and 22.4%, respectively, reflecting efficient capital utilization.

Despite a moderate dividend yield of 0.31%, the company has delivered a healthy profit growth of 36.2% CAGR over the last five years. However, potential concerns include a comparatively high Price-to-Earnings (P/E) ratio of 40.0, suggesting that the stock might be trading at a premium.

In comparison to peers in the chemical sector, SRF Ltd exhibits competitive financial ratios, with a higher ROCE compared to the median in the industry. The company has a well-established research and development infrastructure, driving innovation and contributing to its market leadership.

Investors should carefully consider the premium valuation, monitor interest costs, and stay updated on the company’s ongoing projects. Overall, SRF Ltd presents itself as a promising investment opportunity, but due diligence is crucial before making any investment decisions.