SRF Ltd (SRF) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (DAM Capital Advisors Limited): Ladies and gentlemen, good day and welcome to SRF Limited Q2 and H1 FY '27 earnings conference call hosted by DAM Capital Advisors Limited. As a as a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal from DAM Capital Advisors Limited. Over to you, sir.
Nitin Agarwal (DAM Capital Advisors Limited): Thank you. Hi. Good afternoon, everyone, and and thank you for joining us today. We at DAM Capital Advisors Limited are pleased to host SRF Limited's Q2 and H1 FY '27 results conference call. We have with us today Mr. Sameer Kashyap, President and Chief Financial Officer, and Ms. Sugandha Singhal, Senior Vice President, Head Treasury and Investor Relations of SRF Limited. I would like to invite I'd like to invite Ms. Nikita Dhawan, Head of Corporate Communication at SRF, to initiate proceedings for the results con-call. Please go ahead, ma'am.
Nikita Dhawan (SRF Limited): Good afternoon, everyone, and thank you for joining us on SRF Limited's quarter two and half year FY '27 results conference call. We will begin this call with brief opening remarks from our President and Chief Financial Officer, Mr. Sameer Kashyap, following which we will open the forum for an interactive question-and-answer session. Before we begin this call, I would like to point out that some statements made in this call may be forward-looking, and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. I would now like to invite Mr. Kashyap to make his opening remarks.
Sameer Kashyap (SRF Limited): Thank you, Ni- Nikita. Good afternoon, everyone, and welcome to SRF Limited's Q2 and H1 FY '27 earnings conference call. Thank you for joining us today. I trust you've had the opportunity to review
Sameer Kashyap (SRF Limited): financial results and the investor presentation shared earlier. I will begin with an overview of our performance for the quarter and the first half of the financial year and then cover key developments and business updates across our segments, after which, we will open the floor for questions. I am pleased to share that SRF has delivered a strong performance across its key business segments in Q2 FY '27, despite continuing global uncertainties. The operating environment remained volatile. Geopolitical developments, supply chain disruptions, higher raw material prices, and elevated freight costs, all weighed on the quarter. However, despite these headwinds, our businesses responded effectively to changing market conditions and remained focused on maximizing opportunities. This was supported by our diversified portfolio, continued focus on operating efficiency, and our strong customer relationships. We continue to make advances on our strategic investments, technology-led cost optimization interventions, and new product development initiatives. Our investments in future growth areas continue to progress well, laying the foundation for sustainable growth and strengthening our market position. We remain focused on building our capabilities, deepening customer relationships, and growing the share of value-added products to support the company's growth over time. For the quarter ended September 30th, 2026, consolidated revenue stood at 4,904 crores, registering a growth of 35% when compared with a comparable period last year. The company's operational EBIT increased by 26% to 816 crores over the comparable period last year, and profit after tax stood at 509 crores, registering a growth of 31% over the corresponding period last year. For H1 FY '27, consolidated revenue increased by 33% to 9,937 crores when compared with the comparable period last year, while operational EBIT grew by 44% to ₹1,932 crores over the comparable period last year. Profit after tax increased by 55% to 1,268 crores, again, when compared with comparable period last year. At the start of the year, we had guided to a revenue growth of 15% to 20% in our chemicals business. With a strong H1 performance delivered, we feel confident to reiterate that we expect to deliver towards the higher end of the stated guidance for FY '27. I will now take you through the performance of our individual businesses. Our chemicals business reported a 25% increase in revenue, from 1,667 crores to 2,079 crores during Q2 FY '27 compared to the corresponding period last year. The specialty chemicals business continued to operate in a challenging market environment. In agrochemicals, we are witnessing demand recovery across select pockets, underpinned by our strong customer relationships. Progress made by some of our customers on registration for key active ingredients is further strengthening our future demand visibility. We compute, we'll continue to expand our pharmaceutical intermediates portfolio through targeted product development and customer engagements. New product approvals and commercialization are progressing effectively and helping us build a broader portfolio and opportunity pipeline. Together, these developments in agrochemicals and pharmaceuticals are positive for the business. We expect them to ramp up progressively over the coming years. Launching new products and scaling up existing ones remain key priorities for the business. In an environment shaped by excess capacity, we remain focused on strengthening our cost competitiveness through technology-led process improvements and effective sourcing strategies. Our ability to export select products even to China reflects well on the strength of our technology, operational efficiency, and global cost competitiveness. The commentary from global innovators on the proposed diversification of their supply chains away from Europe is encouraging. While both China and India are expected to benefit from this shift, many customers continue to value a diversified and resilient supplier base, creating opportunities for trusted Indian manufacturers. We have witnessed similar trends in the past, where changes in global supply chains translated into incremental business opportunities for Indian producers. Given our technology strength, demonstrated cost competitiveness, and long-standing customer relationships, we believe SRF is well
Sameer Kashyap (SRF Limited): our traditional areas of strength. This provides us an opportunity to enter new segments, such as solutions centered around environment and sustainability. At an appropriate juncture, we will share more on these opportunities. R&D remains a key competitive advantage for SRF and an important enabler of our long-term growth strategy. Our team of over 500 scientists, engineers and scale-up specialists work through dedicated research labs. These include separate teams focused on agrochemicals, pharmaceuticals, and other specialty applications. This domain-focused approach helps accelerate innovation tailored to specific market requirements. SRF now has 160 patents and has filed 539 patent applications in total, reflecting our sustained commitment to technology, leadership and value creation. The Fluorochemicals Business delivered a strong quarter, demonstrating the strength and operational excellence of the business. Our growth was supported by higher HFC volumes, improved realizations and successful expansion into newer markets. Despite disruption to global trade flows and logistics, given the ongoing geopolitical uncertainty, the business could make significant inroads to expand volumes and revenues even in the Middle East. We have been able to continuously broaden our geographic footprint, gain market share and leverage our product portfolio to maximize market-specific opportunities. Additionally, sustained domestic leadership and improving returns from our brand investments further strengthened our compe- competitive position. The HFC capacity expansion at Dahej is progressing well and remains aligned with our long-term growth strategy. Our immediate priority continues to be maximizing utilization of the existing HFC plants during the baseline period while strengthening our presence in key markets and expanding customer relationships. Looking ahead, we expect demand and pricing for refrigerants to remain broadly stable, barring normal seasonality, while our diversified geographic footprint and continued expansion into newer geographies is expected to support growth and provide greater resilien- resilience across specific market cycles. We are also preparing for the next generation of refrigerants through our HFO investment at Gopalpur, Odisha, where key regulatory approvals have recently been secured. The HFO project is on track for commissioning in Q4 FY28. On commissioning, we expect to be among the top 3 to 4 refrigerant gas manufacturers globally, which will significantly strengthen our competitive position in the industry. Our in-house HF integration will enable us to address opportunities associated with electronic grade HF for wafer cleaning in the semiconductor industry. In Fluoropolymers, our focus continues to be on enhancing the grades in our PTFE portfolio. During the quarter, we made further progress in customer qualifications and commercialization of higher-value grades, resulting in an improved product mix led by fine cut grades and the commencement of commercial micropowder sales as well. As we continue to broaden our presence in specialized applications, the portfolio is becoming increasingly differentiated, positioning the business beyond bulk PTFE and improving the business mix to higher-value grades over time. Our PVDF project remains on track for capitalization with customer engagements underway across multiple end-use applications. PVDF will inish- initially start making inroads into chemical processing, fluid handling, and architecture coating applications, with a goal to gradually move to solar and battery applications as well. This is an important milestone in expanding our fluoropolymer portfolio to address higher growth segments. Our FEP and FKM projects are also progressing well and are on track. This partnership with Chemours creates a unique opportunity to enter into applications that require high performance, durability and advanced functionality. The growth in our fluoropolymer portfolio over time will not only expand addressable market, but will also strengthen our positioning in emerging value chains across electricals and electronics, semiconductors, and aerospace and defense. Moving on to our Performance Films and Foils Business, the business recorded a 51% increase in revenue from 1,408 crores to 2,122 crores during Q2 FY27 compared to the corresponding period last year. The Performance Films and Foils Business continues to perform well in a challenging operating environment. Even as customer procurement
Sameer Kashyap (SRF Limited): During the quarter, following elevated buying activity in Q1, demand remained robust across geographies and asset utilisation stays strong. While elevated raw material prices in the quarter led to a moderation in in inventory related benefits compared with the previous quarter, the business continued to deliver healthy growth through disciplined execution and a growing contribution from value-added products. Our focus remains on expanding our portfolio of value-added products and differentiated substrates that are aligned with long-term growth sectors and evolving customer requirements. These continued to gain traction led by offline coated and metallized products across geographies. Capacitor grade film has scaled up well with key customer approvals having been secured and commercial sales progressing well ahead of initially anticipated timelines enabling us to participate in the fast-growing electrical and electronic sector. This is complemented with the progress we have made on securing securing approvals from key customers for aluminium foil used in capacitors where commercial sales are expected to commence in Q3 of FY '27. On the operational front, the hybrid BOPP/BOPE film line is expected to commercialise in Q3 of FY '27. Sustainability continues to be an important strategic priority for the business. We are actively working with customers and partners to develop solutions that support circularity including recyclable mono-material structures, advanced coatings and sustainable packaging formats. These initiatives respond to changing customer and regulatory requirements while supporting the development of differentiated solutions. R&D continues to drive our shift towards value-added films and foil. We have commercialised 16 products across BOPET, BOPP and CPP including 13 offline coatings and more than 35 products are under development. We are amongst the forerunners in the industry in super ultra high barriers across substrates. We are also building sustainable mono-material solutions using BOPE, BOPLA and BOPA supported by 17 R&D collaborations with leading global brand owners. Our aluminium foil business delivered a strong financial performance and is steadily evolving into an important growth area. This has been supported by strengthening export traction and successful advancement into higher value grades. We have made considerable progress on high-end aseptic packaging and are now working closely with one of the global leaders in this space. These developments have collectively enabled the business to transition from being a pure packaging films player to a high-end performance films and foil business. Moving on to our Technical Textiles business. The business reported a 25% increase in revenue from 474 crores to 594 crores during Q2 FY '27 over the comparable period last year. The technical textiles business maintained healthy momentum during the quarter. In tyre cord fabrics, we continued to make steady progress on the scale-up of N66 and polyester tyre cord fabrics with customer approvals being positive developments for the business. The upcoming dipping capacity is expected to further enhance the product mix and capacity utilisation in coming quarters. Belting fabrics delivered another strong quarter benefiting from export growth and continued customer additions. Alongside this, we expanded our value-added portfolio through new product commercialisation and customer qualifications. We expect the business to remain stable supported by export markets and a growing contribution from higher value add value applications. Our other businesses comprising coated fabrics and laminated fabrics also delivered a stable performance during the quarter. The coated fabrics business maintained its leadership position in the domestic market supported by a healthy product mix and continued emphasis on value-added products. Our focus on operational efficiencies and cost optimisation helped us navigate the competitive pressures well. The laminated fabrics business delivered a steady performance supported by stable demand across its key applications. Recognising the immense opportunity presented across the set of identified sunrise sectors, SRF has embarked on a journey to effectively target these high-growth areas where our growing product portfolio have wide applications. These identified high-priority sectors span energy storage, electrical and electronics, semiconductors, next-generation cooling solutions, environment, sustainability and renewables, and aerospace and defence. A detailed map on how our new product portfolio is get
Sameer Kashyap (SRF Limited): specific applications in each of these sunrise sectors is part of our investor presentation. While many of these are already announced investments, I would like to draw your attention to the new capex that is approved around aluminum foil for battery applications to address to address the growing opportunities in the energy storage and EV sectors. You would recollect that over a year ago, we had rebranded our packaging films business to a Performance Films and Foils business to reflect our growing aspirations in this segment. In an important step towards realizing these growth aspirations, as we had intimated yesterday, our Board has approved an investment of approximately ₹600 crores to set up a new aluminum foil facility at our existing site at Jaitapur in Madhya Pradesh to cater to battery applications targeted at the growing energy storage and EV sectors. The facility will have a total capacity of about 12,000 metric tons per annum and will serve both lithium-ion and sodium-ion battery applications along with high-end packaging foil. The project will be carried out in two phases. Phase one has an estimated cost of ₹300 crores and is expected to be completed within about 23 months of the Board approval. Importantly, the proposed universal foil mill shall be capable of producing both battery grade and high-end packaging foil. This provides us operational flexibility, enabling us to address multiple value-added end use markets even while customer qualifications for battery applications are in progress. This investment is an important step in expanding our foils business to address battery applications with growing demand arising from the energy storage and EV sectors. The government's ACC PLI scheme, which incentivizes domestic battery manufacturing and mandates progressive domestic value addition, is also expected to accelerate localization of the battery supply chain driving demand for key materials, including battery grade aluminum foil. During Q2 FY '27, SRF Foundation continued to create meaningful impact across education, digital learning, STEM, skilling, health and community development. From strengthening teacher capabilities and advancing AI, robotics and digital literacy, to promoting student innovation, vocational skills, and community participation, the quarter saw several initiatives translate learning into real-world opportunities. Recognition for students across innovation and sports platforms further reflected the growing impact of these interventions in empowering young people and communities. During the quarter, I'm happy to share that SRF was recognized as the overall winner in the Best Supply Chain Solution category at the Adam Smith Awards Asia 2026, recognizing our work in building financial resilience across our supply chain. We also received the supplier collaboration and an innovation award at the UBS Forums' Procurement Excellence Summit and Awards in 2026, recognizing our focus on on innovation and collaboration with our suppliers. These awards reaffirm SRF's commitment to operational excellence, strategic planning, and innovation across businesses. In closing, I would like to state that despite a volatile environment, we remain confident of delivering a healthy second half. Our resilient business models are delivering on the outcomes we had envisaged, and with our investments that target specific sunrise sector opportunities, I'm confident that the future of the company is on a strong wicket. On that note, I conclude my remarks and will be glad to discuss any questions that you may have. I would now like to ask the moderator to open the line for the Q&A session. Thank you very much.
Moderator (DAM Capital Advisors Limited): Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Participants, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rohit Nagraj from 360 ONE Capital Market Private Limited. Please go ahead.
Rohit Nagraj (360 ONE Capital Market Private Limited): Hi, good afternoon. Thanks for the opportunity. Sir, first question is you just mentioned in your opening remarks that second half seasonally is the best for us and we are confident that our growth will
Rohit Nagraj (360 ONE Capital Market Private Limited): more in second half. Is it backed by certain firm commitments, particularly in the chemicals business? And, an allied question to that, in terms of the AI commercialization, the six, seven which we have been working on, if you can give the latest update on the same. Thank you.
110 more turns of this transcript: log in to Stocksigma to read the full call.