SRF surges on acquiring Global DuPont Dymel brand

SRF surged 7.57% to Rs 946.20 at 11:10 IST on BSE after the company said it signed a binding agreement on 31 December 2014 to purchase the global 134a regulated medical pharmaceutical propellant business from DuPont.

The company made announcement at the fag end of trading hours yesterday, 1 January 2015.

Meanwhile, the S&P BSE Sensex was up 324.12 points or 1.18% at 27,831.66.

On BSE, so far 2.12 lakh shares were traded in the counter as against average daily volume of 9.97 lakh shares in the past one quarter.

The stock hit a high of Rs 972, also a record high for the stock. The stock hit a low of Rs 909.70 so far during the day. The stock hit a 52-week low of Rs 197 on 27 January 2014.

The stock had outperformed the market over the past one month till 1 January 2015, rising 1.09% compared with Sensex's 3.68% fall. The scrip had also outperformed the market in past one quarter, gaining 16.6% as against Sensex's 3.54% rise.

The mid-cap firm has equity capital of Rs 57.42 crore. Face value per share is Rs 10.

SRF signed a binding agreement on 31 December 2014 to purchase the global 134a regulated medical pharmaceutical propellant business from DuPont, a world leader in innovation and science. This DuPont Fluorochemicals business is part of the Performance Chemicals segment which DuPont anticipates separating by mid-2015. The acquisition comes into force with immediate effect.

Under the transaction, SRF will own the DuPont Dymel brand and will also receive the technology and know-how for setting up its own 'current Good Manufacturing Practices' (cGMP) facility for manufacturing HFC 134a Pharma grade. DuPont and SRF have entered an agreement under which DuPont will supply SRF with product until SRF's production facility is approved.

SRF is the only Indian manufacturer of HFC 134a and also has the rare distinction of developing the product with indigenous technology. For SRF, this transaction provides immediate access to DuPont's technology, brand and customers,thus enabling an instant entry into the niche pharmaceutical segment at a global level. SRF has two manufacturing facilities for HFCs in India. Through this transaction SRF would not only utilise its existing HFC 134a facilities better, but would also become one of the world's few suppliers of the pharma grade of HFC 134a, a product with stringent purity and handling parameters, and superior margins.

In the long run, the access to the pharma segment allows SRF to move up the value chain and cater to the growing demand for the pharma grade HFC 134a, which, as per the global health standards, is approved as a long-term environment friendly alternative propellant for a growing number of medical applications.

Additionally, with the possibility of some drugs going off patent by 2019, it is likely that India will witness a significant growth in the demand of pharma grade of HFC 134a and SRF, as the only Indian supplier of the product, looks well positioned to reap the benefits.

SRF's net profit rose 60.9% to Rs 76.85 crore on 9.8% rise in total income to Rs 932.74 crore in Q2 September 2014 over Q2 September 2013.

SRF is a multi-business entity engaged in the manufacture of chemical based industrial intermediates. Its business portfolio covers technical textiles, fluorochemicals, specialty chemicals, packaging films and engineering plastics.

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