SRF Q3 prompts cautious optimism from analysts; specialty chemicals weigh

Brokerages have maintained a cautiously positive stance on SRF, factoring in moderated earnings expectations but continued confidence in the company’s long-term fundamentals and capex-led growth after the chemical conglomerate reported its Q3FY26 results.

 

For SRF, brokerages believe refrigerants and fluorochemicals remain the key growth drivers, supported by stable global demand, while specialty chemicals face near-term headwinds due to weak demand and pricing pressure.

 

Brokerage firm Emkay Global has retained its ‘Add’ call on SRF stock, while factoring in near-to-medium-term challenges in the specialty chemicals business. Elara Capital has reaffirmed its ‘Accumulate’ rating, citing resilient refrigerant demand. Motilal Oswal Financial Services (MOFSL), meanwhile, has retained its ‘Buy’ call, expecting the chemicals business—fluorochemicals and specialty chemicals—to maintain growth momentum.

 

SRF Q3FY26 highlights

SRF reported a 59.6 per cent YoY jump in profit after tax (PAT) to ₹432.7 crore in Q3FY26, compared to ₹271 crore in the corresponding quarter last year. Gross operating revenue rose 6.3 per cent YoY to ₹3,712.5 crore from ₹3,491.3 crore.

 

Earnings before interest, taxes, depreciation, and amortisation (Ebitda) increased 22.2 per cent YoY to ₹845.5 crore in Q3FY26, up from ₹693.4 crore reported in Q3FY25.

 

The company noted that the specialty chemicals business was impacted during the quarter due to deferred offtake for some key products by agro majors and continued pricing pressure from Chinese competitors.

 

On the other hand, the fluorochemicals business delivered a strong performance, driven by higher volumes and realisations of HFCs in domestic and export markets, along with steady performance from industrial chemicals.

Meanwhile, here's what brokerages said on SRF post Q3 results:

Emkay Global - Add | Target Price ₹3,250

Emkay has reiterated its ‘Add’ rating on SRF stock with a target price of ₹3,250 per share. The brokerage has reduced its FY26/FY27/FY28E Ebitda estimates by 5–6 per cent to factor in near-to-medium-term headwinds in the specialty chemicals business.

 

The brokerage highlighted that the better margin performance YoY in the chemicals business was driven by higher volume and realisation of refrigerants in both domestic and export markets, though it was offset by subdued performance in the specialty chemicals business due to deferred customer offtake and pricing pressure from Chinese competitors. Performance films showed stable results, while technical textiles continued to face challenges.

 

Management, according to Emkay, remains cautiously optimistic, expecting slower growth in the specialty chemicals business, while refrigerants continue to do well globally.  "SRF will incur all new capex, including HFOs, at its new land parcel in Odisha. We cut our FY26/FY27/FY28E Ebitda by 5-6 per cent to factor in near-to-medium-term headwinds in the specialty chemicals business. Retain ‘Add’ and target price of ₹3,250," said the brokerage in its report.  ALSO READ | AU SFB shares rise on strong Q3 show, but brokerages split on valuation

Elara Capital - Accumulate | Target Price ₹3,258

Elara Capital has reiterated its ‘Accumulate’ rating on SRF with a reduced target price of ₹3,258 per share, down from ₹3,423 earlier. Based on the weak demand environment for the specialty chemicals segment in 9MFY26, Elara has cut its Ebitda forecasts by 14 per cent for FY26E, 13 per cent for FY27E, and 10 per cent for FY28E.

 

“We reiterate ‘Accumulate’ due to resilient refrigerant demand. We value SRF using DCF, assuming a 5.0 per cent terminal growth rate (unchanged), a 9.8 per cent WACC (unchanged), and an average Ebitda margin of 23.5 per cent (from 23.7 per cent) over FY26E–28E,” said Elara in its report.

 

MOFSL - Buy | Target Price ₹3,660

MOFSL has retained its ‘Buy’ rating on SRF with a target price of ₹3,660 per share. The brokerage expects the chemicals business (fluorochemicals and specialty chemicals) to maintain its growth momentum, driven by pent-up orders from Q2 and Q3, the ramp-up of recently commissioned plants, and the launch of new products, coupled with a strong R&D and innovation pipeline. Stable demand for refrigerant gases in international markets, a recovery in the domestic market, and a diversified portfolio further support the outlook.

 

The packaging business is also expected to report better margins, driven by favorable pricing for BOPP and a strong portfolio of high-impact value-added products, alongside the recovery in domestic markets for both BOPET and BOPP.

 

“We project a CAGR of 13 per cent/24 per cent/32 per cent for revenue/Ebitda/adjusted PAT over FY25–28E. We reiterate our ‘Buy’ rating and value the stock on an SoTP basis, arriving at a target price of ₹3,660,” said MOFSL.

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