SRF profit rises 31.2% in second quarter as margins narrow and results miss estimates
Key Facts
India's SRF reported a 31.2% year-on-year rise in consolidated net profit for the second quarter of fiscal 2027, but the result fell short of a CNBC-TV18 poll forecast as its profit margin narrowed. Net profit stood at 509.12 crore rupees, according to results cited by Upstox, compared with the poll estimate of 598 crore rupees for the same quarter. The earnings before interest, taxes, depreciation and amortisation margin fell to 19.3% from 21.3% in the corresponding period of the previous fiscal year, according to NDTV Profit. Participants in the CNBC-TV18 poll had expected a margin of 22.5%, leaving operating profitability below expectations despite annual net profit growth. Compared with the previous quarter, net profit fell 32.9% from 758.87 crore rupees, according to Upstox, reflecting a sequential decline in earnings alongside the year-on-year increase. Revenue rose 34.7% to 4,904 crore rupees from 3,640 crore rupees in the second quarter of the previous fiscal year, NDTV Profit reported. Earnings before interest, taxes, depreciation and amortisation also fell short of the CNBC-TV18 poll estimate of about 1,055 crore rupees, with net profit, operating earnings and the operating margin all missing expectations.
For the first half of fiscal 2027, SRF reported a 55% year-on-year increase in net profit in its statement, with earnings continuing to grow from the corresponding period despite the decline between quarters. Consolidated net profit for the period stood at 1,268 crore rupees, compared with 820 crore rupees in the first half of the previous fiscal year, according to the company. In its specialty chemicals business, the company said "excess capacity in China" was among the factors shaping the operating environment during the quarter under review, in comments reported by CNBC-TV18 via TradingView. In its performance films and foil business, the company linked moderating demand to inventory accumulation following strong purchasing activity in the previous quarter. The company described the development by saying "demand moderated due to inventory accumulation," according to comments on the business's performance reported by the channel. The films and foil business thus faced an inventory-related slowdown in demand following the previous quarter's purchases, while operating conditions in specialty chemicals included excess Chinese capacity.
Alongside the results announcement, SRF's board approved an investment of 600 crore rupees to build an Indian facility to produce aluminium foil for batteries, according to CNBC-TV18. The investment decision concerns a battery foil plant in India, under a plan that includes an initial completion date followed by a second phase, according to project details announced by the company. The plant's proposed total production capacity is about 12,000 metric tonnes annually upon completion, according to SRF's statement, the capacity targeted by the new facility in this business. The company set September 2028 as the target for initial completion of the project, establishing a timetable for the investment approved by the board alongside the quarterly results. Under the plan announced in the company's statement, the second phase is scheduled to follow by September 2030.