SRF Limited: Navigating Global Headwinds to Capture Chemical Sector Opportunities

The recent financial results from SRF Limited have sparked investor curiosity: Can the company sustain its Q4 FY2025 outperformance amid a chemical sector riddled with global competition and pricing pressures? With a 24.5% surge in net profit to ₹526 crore and strategic moves to counter Chinese dominance in fluorochemicals, SRF presents a compelling narrative—but investors must weigh this optimism against lingering risks. Let’s dissect the data and assess whether this is a buy, hold, or wait scenario.

The Q4 Performance: A Mixed Bag with Signs of Resilience

SRF’s Q4 FY2025 results highlighted a reversal of its FY2024 slump, when net profit fell 38% to ₹1,336 crore. The latest quarter’s 24.5% net profit growth reflects operational discipline and margin optimization. However, the picture is uneven across segments:

• Chemicals Segment: Despite a 14% year-on-year revenue decline to ₹1,816 crore (contradicting the user’s “30% growth” claim), management cited a “reasonable recovery” momentum. The segment’s struggles stem from Chinese competitors flooding markets with low-cost refrigerants, squeezing SRF’s pricing power. Yet, fluorochemicals—critical for pharmaceuticals and eco-friendly refrigerants—remain a bright spot. SRF retains a global leadership position in pharma-grade 134a/P and its FLORON® refrigerants, which align with lower global warming potential (GWP) standards.
• Technical Textiles: The segment delivered a 9% revenue rise, with coated fabrics hitting record sales. This resilience underscores SRF’s strength in niche, high-margin products like conveyor belting and industrial fabrics.
• Packaging Films: A modest 3% revenue growth to ₹1,153 crore suggests lingering margin pressures from global competition, though management sees long-term demand for its multi-locational manufacturing footprint.