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Indian chemicals and polymers maker SRF on Monday reported a 41% fall in first-quarter profit due to lower sales in its chemicals and packaging films businesses.
Consolidated net profit after tax stood at 3.59 billion rupees ($43.86 million) for the three months ended June 30, compared with 6.08 billion rupees a year earlier, the company said in an exchange filing.
SRF's total revenue from operations for the quarter fell 14.2%.
Revenue for the company's packaging films business, which constitutes 32.8% of total revenue, fell 26.8%, while the chemicals segment's revenue, which comprises 49.7%, fell 3.6%.
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KEY CONTEXT
Analysts at IDBI Capital say the Indian chemicals sector is poised for growth and has the potential to become a $1 trillion industry by 2040, with an compound annual growth rate (CAGR) of 8-10% over 2021-2040.
Analysts at brokerage Centrum, however, expect the earnings of chemicals companies, including SRF, to take a significant hit in fiscal 2024, owing to China dumping its products in India and the agrochemicals market being affected by El Nino and high-cost inventories. While demand in India has been good, the brokerage says that exports continue to be under pressure, which is expected to impact the performance of the entire chemicals and specialty chemicals sector.
PEER COMPARISON
Valuation Estimates (next 12 Analysts' sentiment (next 12 months) months) RIC PE EV/EBI Revenue Profit Mean # of Stock to Div TDA growth growth rating* analysts price yield target** (%) SRF Ltd SRFL.NS 25.55 15.83 12.75 12.60 Buy 25 0.76 0.33 Navin Fluorine NAFL.NS 40.84 27.08 30.62 32.25 Buy 22 0.85 0.27 International Ltd PI Industries PIIL.NS 35.62 25.88 22.50 19.99 Buy 22 0.93 0.27 Ltd UPL Ltd UPLL.NS NULL 5.74 6.95 19.95 Buy 21 0.70 1.58 * Mean of analysts' ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** 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 Refinitiv
-- $1 = 81.8555 rupees
(Reporting by Ashish Chandra in Bengaluru; Editing by Sonia Cheema)
