SRF - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 4.1

📊 SRF Limited demonstrates strong financial health and operational efficiency, though its valuation metrics suggest caution for new investors.

📈 Positive

• Low Leverage: Debt-to-equity ratio of 0.25 reflects a conservative capital structure.
• Healthy Returns: ROCE of 13.7% and ROE of 11.5% indicate efficient use of capital.
• Strong EPS: ₹52.4 supports long-term earnings visibility.
• Quarterly Profit Surge: Qtr Profit Var of 61.1% shows robust operational performance.
• Business Diversification: Presence in chemicals, packaging, and technical textiles enhances resilience.

⚠️ Limitation

• High Valuation: P/E of 56.0 is significantly above the industry average of 22.5.
• Negative PEG Ratio: -10.0 suggests poor valuation relative to growth.
• Declining PAT: ₹363 Cr. vs ₹397 Cr. in previous quarter indicates short-term pressure.
• Weak RSI: 39.8 implies bearish momentum.

📉 Company Negative News

• Recent decline in FII holdings by 0.26% may reflect cautious sentiment.
• Stock trading below 50 DMA (₹2,997) suggests technical weakness.

📈 Company Positive News

• Strong YoY growth in quarterly profit and EBIT.
• Brokerages have raised target prices based on robust earnings outlook.
• Positive shift in DII holdings (+0.68%) signals domestic confidence.

🏭 Industry

• Specialty chemicals sector benefits from global supply chain diversification.
• Technical textiles offer stable demand across automotive and industrial segments.
• Industry P/E of 22.5 highlights SRF’s premium valuation.

🧾 Conclusion

• Entry Zone: ₹2,600–₹2,750 based on RSI and support levels.
• Long-Term View: Hold for 3–5 years; strong fundamentals and diversified operations support sustained growth.
• Valuation Watch: Consider phased entry or wait for earnings catch-up to justify current price.

Sources