SRF Q3 2022 Concall Highlights

Operational Highlights

  •  Revenues for the quarter stood at  ₹3,345.9 as against  ₹2146.4 Cr in Q3FY21, translating growth of 55.9% YoY
  • EBITDA margins stood at 25.7%

Revenue breakup

  • Chemical business-42.6%
  • Packaging films-38.1
  • Technical textile- 16.1%
  • Others-3.2%
  • Launched new pharma intermediate during the quarter and successfully conducted  campaigns for 2-3 upcoming products.
  • Achieved highest ever production in key products and are constantly enhancing capacity utilisation at newly commissioned facility
  • Intent to keep debt at similar levels
  • SRF share for HFC in domestic market is 60-70% and for non-HFC it will probably be in  40-50%
  • The cycle for renewal of contracts begins in Q1 and Q2 next year
  • The volumes have gone up substantially in the US markets

Chemical

  • Segment delivered healthy performance during the period owing to incremental revenues, expansion in product portfolio and increased focus on cost of production
  • Fluorochemicals Business delivered robust performance on the account of  higher prices of certain key refrigerant products in critical international markets, Increased export volumes of HFC blends and chloromethanes.
  • Capex in chemicals: Pharma Intermediates plant (PIP) at a cost of  ₹190 crore; to strengthen SRF’s pharma capabilities. The new pharma plant is designed to make 2-3 different products. 
  • Expecting demand for refrigerant to stay healthy in the upcoming quarter with HST and  R32 gaining momentum and likely to expand further.
  • Refrigerant gas demand is higher in Q4 and expect the Q4 to perform better than last year

Packaging film business

  • Business performed very well, with both the domestic and international facilities delivering robust results.
  • Volume growth owing to additional capacities in Hungary and Thailand coming on stream. Margins pressure could be anticipated as few line will come onstream in coming quarters
  • Higher margins witnessed in BOPP segment

Technical textile business

  • Despite weak demand for nylon triangle fabrics, textile performed well driven by volumes in belting fabrics  and industrial polyester yarn segment
  • The polyester yarn segment achieved best ever results amidst challenging market situation
  • Due to slow demand in tyre or OEM industry, nylon segment is impacted by lower volumes and high input costs affecting the margins profile for the company
  • The company is constantly focusing on cost improvement and efficiency

Capex

  • SRF is investing in the aluminium foil segment to create business adjacencies keeping in mind growth as a core strategy, at a new site in Jaitapur, Indore, India at an approximate cost of  ₹425 crore
  • The plant is expected to commercialise in next 20 months i.e. around Sep-Oct 2023
  • Asset turn will range  from 1.75-2X and IRR of 15-18%
  • Total capex for the year is  ₹1900-2000 Cr of which: ₹1600- ₹1700 Cr to be spent on ongoing projects, additionally  ₹400- ₹500 Cr capex will get sanctioned during FY23. So FY23 capex will range in  ₹2100- ₹2200 Cr

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