Indian chemicals maker SRF's Q1 profit falls on subdued global demand
BENGALURU, July 23 (Reuters) -Indian chemicals and polymers maker SRF SRFL.NS posted a drop in profit for the sixth straight quarter on Tuesday, hurt by sustained weak demand in its mainstay chemicals business.
The unit consists of specialty chemicals, fluorochemicals and agrochemicals among others, contributes nearly half of company's quarterly revenue.
SRF reported a consolidated net profit after tax of 2.52 billion rupees ($30.11 million), down about 30% from last year.
Total expenses jumped nearly 10%, led by rise in input costs.
For further earnings highlights, click nFWN3JF0VM
KEY CONTEXT
The chemicals industry has been grappling with high inventory and destocking for the past few quarters, leading to continuous pressure on volume and margins, according to analysts.
Jefferies analysts said in a pre-earnings note their channel checks suggested weakness in SRF's specialty portfolio in first quarter. SRF's largest product in specialty chemicals (~22% of segment revenues) has seen 16% price erosion in the past year on account of new Chinese capacity, the brokerage added.
PEER COMPARISON
Valuation (next 12 months) | Estimates (next 12 months) | Analysts' sentiment | |||||||
RIC | PE | EV/EBITDA | Revenue growth% | profit growth% | Mean rating* | # of analysts | Stock to price target** | Div yield (%) | |
SRF Ltd | SRFL.NS | 38.59 | 21.56 | 14.75 | 27.53 | HOLD | 25 | 1.02 | 0.30 |
Coromandel International Ltd | CORF.NS | 23.85 | 15.70 | 5.06 | 14.29 | BUY | 9 | 1.16 | 0.38 |
Deepak Fertilisers and Petrochemicals Corp Ltd | DPFE.NS | 12.92 | 7.77 | 14.00 | 42.26 | BUY | 1 | 1.16 | 1.12 |
PI Industries Ltd | PIIL.NS | 34.22 | 23.18 | 15.56 | 3.89 | BUY | 23 | 0.94 | 0.38 |
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above the PT
APRIL-JUNE STOCK PERFORMANCE
-- All data from LSEG
-- $1 = 83.6817 Indian rupees
SRF June Qtr 2024 vs Peers https://tmsnrt.rs/4bSolzL
Reporting by Ashish Chandra in Bengaluru
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