Coverage Initiation

Motilal Oswal has initiated coverage of SRF Limited, assigning a Buy rating and a target price of ₹3,350 per share, which represents an implied upside of approximately 21% from the previous closing price of ₹2,764.55.

Recent Share Price and Market Capitalisation

On the day of the article, SRF shares rose up to 0.8% to ₹2,789.35, and the company's market capitalisation was reported at Rs 81,635.40 crore.

Financial Results

For the quarter ended Q4 FY26, revenue increased 7.0% year‑on‑year to Rs 4,615 crore from Rs 4,313 crore in Q4 FY25, while net profit rose from Rs 526 crore to Rs 582 crore. The profit after tax (PAT) for FY26 reached Rs 2,040 crore, a 49% increase YoY, and EBITDA margins recovered to 22.8%. Return on capital employed (ROCE) stood at 14.6%, return on equity (ROE) at 14.3%, and the debt‑to‑equity ratio remained low at 0.36.

Segmental Highlights

Fluorochemicals: Revenue grew about 60% YoY in FY26, driven by robust demand for refrigerant gases in both domestic and international markets, higher volumes and better price realizations.

HFO Investment: SRF is allocating more than Rs 2,300 crore to develop next‑generation hydrofluoroolefin (HFO) refrigerants, positioning the company to benefit from global regulatory shifts toward low‑global‑warming‑potential products.

Speciality Chemicals: Management expects a recovery starting FY27, supported by new product launches, capacity expansions, and a rebound in agro‑chemical demand.

Growth Outlook and Valuation

Motilal Oswal projects a compound annual growth rate (CAGR) of roughly 22% in PAT through FY28, with earnings per share expected to reach Rs 101. The brokerage estimates the stock will trade at about 27 times FY28 earnings, which it deems reasonable given the company's diversified growth drivers.

Business Structure and Operations

SRF’s revenue mix comprises 49% from the Chemicals segment, 37% from Performance Films & Foil, and the remaining 14% from Technical Textiles and other businesses. The company exports to more than 90 countries, operates in five countries, runs 16 manufacturing facilities, and employs over 9,500 people worldwide.