SRF - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 3.4

📊 Analysis Summary

SRF Ltd is a well-established player in specialty chemicals and industrial intermediates. However, its valuation metrics and growth indicators suggest caution for long-term investors

🔍 Valuation & Financial Metrics

P/E Ratio: 64.4 vs Industry PE of 27.2 — significantly overvalued

PEG Ratio: -5.02 — indicates negative earnings growth, a red flag

P/B Ratio: ~7.3 — high, suggesting premium valuation

Dividend Yield: 0.23% — low income generation

Debt-to-Equity: 0.37 — manageable leverage

📈 Growth & Profitability

ROE: 10.4%, ROCE: 12.3% — moderate returns, below top-tier benchmarks

EPS: ₹48.3 — decent, but not enough to justify high P/E

Quarterly PAT Decline: ₹526 Cr → ₹432 Cr — 17.8% drop, signaling margin pressure

Revenue Growth: 12.13% YoY — healthy, but not exceptional

📉 Technical Indicators

RSI: 46.6 — neutral zone, no strong momentum

MACD: -6.23 — bearish crossover

Volume: Below 1-week average — waning interest

DMA50 & DMA200: Price hovering near DMA50 (₹3,105), support at DMA200 (₹2,838)

✅ Long-Term Investment Outlook

SRF has strong fundamentals in terms of business diversification and global reach, but its valuation is stretched and growth metrics are cooling off. The PEG ratio and high P/E make it less attractive for long-term entry at current levels.

📌 Ideal Entry Price Zone

Accumulation Zone: ₹2,650–₹2,850

Near DMA200 and historical support

Offers better risk-reward with lower valuation

🧭 If You Already Hold SRF

🕒 Holding Strategy

Time Horizon: 2–3 years minimum

Monitor: ROE/ROCE trends, specialty chemical margins, and capex execution

🚪 Exit Strategy

Partial Exit: If price crosses ₹3,300–₹3,400 without earnings support

Full Exit: If ROE drops below 9% or PEG remains negative for 2+ quarters

Re-entry: On dips near ₹2,700 with improving fundamentals

Would you like a comparison with peers like Atul Ltd or DCM Shriram to see if there's a better alternative in the specialty chemicals space?

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