SRF - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.9
| Stock Code | SRF | Market Cap | 78,453 Cr. | Current Price | 2,646 ₹ | High / Low | 3,325 ₹ |
| Stock P/E | 43.8 | Book Value | 428 ₹ | Dividend Yield | 0.34 % | ROCE | 15.9 % |
| ROE | 14.8 % | Face Value | 10.0 ₹ | DMA 50 | 2,614 ₹ | DMA 200 | 2,750 ₹ |
| Chg in FII Hold | -0.81 % | Chg in DII Hold | 0.99 % | PAT Qtr | 515 Cr. | PAT Prev Qtr | 528 Cr. |
| RSI | 52.2 | MACD | 28.9 | Volume | 5,31,819 | Avg Vol 1Wk | 3,94,392 |
| Low price | 2,314 ₹ | High price | 3,325 ₹ | PEG Ratio | -11.2 | Debt to equity | 0.27 |
| 52w Index | 32.9 % | Qtr Profit Var | 0.45 % | EPS | 58.2 ₹ | Industry PE | 19.7 |
📊 Financials: SRF has a market cap of ₹78,453 Cr. Quarterly PAT remained stable at ₹515 Cr. vs ₹528 Cr. (0.45% variation). ROE at 14.8% and ROCE at 15.9% reflect healthy returns. Debt-to-equity ratio of 0.27 indicates low leverage, supporting financial stability. Cash flows are consistent, though profit growth is currently muted.
💹 Valuation: Current P/E of 43.8 is significantly higher than the industry average of 19.7, suggesting overvaluation. P/B ratio (~6.2) is elevated compared to book value ₹428. PEG ratio is negative (-11.2), showing weak earnings growth relative to valuation. Intrinsic value appears lower than CMP ₹2,646, limiting near-term upside.
🏦 Business Model: SRF operates across chemicals, packaging films, and technical textiles. Its competitive advantage lies in diversified revenue streams, global presence, and strong R&D capabilities. However, cyclical demand in chemicals and margin pressures in packaging films pose challenges.
📉 Entry Zone: RSI at 52.2 suggests neutral momentum, while MACD at 28.9 indicates mild bullishness. A potential entry zone could be around ₹2,400–₹2,500 for accumulation. Long-term investors may hold, given SRF’s diversified business and strong fundamentals, but valuation risks remain.
Positive
- 📈 Healthy ROCE (15.9%) and ROE (14.8%).
- 🌍 Diversified business across chemicals, films, and textiles.
- 💰 Low debt-to-equity ratio (0.27).
Limitation
- ⚠️ High valuation with P/E at 43.8 vs industry 19.7.
- 📉 Negative PEG ratio (-11.2), weak growth support.
- 🔄 Profit growth muted (0.45% variation QoQ).
Company Negative News
- 📉 Decline in FII holding (-0.81%).
- ⚠️ Stock trading below DMA 200 (2,750).
Company Positive News
- 📊 Stable quarterly PAT at ₹515 Cr.
- 📈 Increase in DII holding (+0.99%).
Industry
- 💹 Industry PE at 19.7, much lower than SRF’s 43.8.
- ⚡ Chemicals and packaging films sector facing cyclical demand.
- 🏦 Strong global demand for specialty chemicals and films.
Conclusion
⚖️ SRF is a fundamentally strong, diversified company with healthy returns and low leverage. However, valuations are stretched, limiting short-term upside. Long-term investors may accumulate near ₹2,400–₹2,500, with confidence in SRF’s diversified growth model, but should remain cautious about cyclical risks and high valuation multiples.
For a deeper perspective, you might explore SRF peer comparison or a technical chart analysis to complement this fundamental view.