SRF anticipates its Chemical Business revenue to reach the upper limit of its annual guidance of 15-20% growth by FY27. This outlook is supported by strong specialty segment performance in the second half of the fiscal year and ongoing volume recovery.

Drivers of Growth

The company attributes the robust expansion plans in its core business segment to specific operational strengths. The anticipated achievement of the upper growth target relies on two key factors:

• Strong growth in the specialty chemicals portfolio during H2.
• Continued recovery in volumes across the chemical operations.

This confidence signals a positive trajectory for the company's core business, moving beyond general expansion plans to a specific expectation of hitting the top end of projected ranges.

Regulatory Approvals and Project Timeline

The company confirmed that it has secured all necessary regulatory approvals for its Hydrofluoroolefin (HFO) project located in Gopalpur. This milestone clears the path for the project's execution phase.

SRF is currently tracking a commissioning timeline of Q4FY28 for the Gopalpur facility. This schedule aligns with the broader strategic roadmap to enhance capacity and product portfolio in the specialty chemicals domain.

Strategic Outlook

The management remains optimistic about meeting the upper end of the projected revenue growth range. This outlook is underpinned by the progress on key capital expenditure projects and sustained demand in the chemical sector.

SRF reported Q2FY27 revenue of ₹4,904 crore, a 35% year-on-year increase from ₹3,640 crore in the corresponding period last year. The top line exceeded the market estimate of ₹4,695 crore.

Despite the strong revenue growth, the company’s bottom line fell short of expectations. Consolidated net profit stood at ₹509 crore, compared to ₹388 crore YoY, missing the analyst consensus of ₹598 crore.

Earnings snapshot

Margin compression

EBITDA for the quarter came in at ₹945 crore, up from ₹774 crore YoY but below the estimated ₹1,055 crore. Consequently, the EBITDA margin contracted to 19.3% from 21.27% in the previous year’s second quarter. The margin also trailed the estimated 22.5%.

Segment performance

The Chemicals Business reported a 25% increase in segment revenue, rising from ₹1,667 crore to ₹2,079 crore. Operating profit grew by 10% to ₹528 crore. Fluorochemicals saw robust refrigerant sales volumes with positive pricing momentum, while Specialty Chemicals navigated evolving global pricing trends and industry overcapacity in China.

The Performance Films & Foil Business was a standout performer, reporting a 51% increase in segment revenue to ₹2,122 crore. Operating profit surged 73% to ₹206 crore. The business achieved its highest-ever packed production of films, though demand was moderated by inventory build-up following heightened buying activity in Q1.

The Technical Textiles Business reported a 25% increase in segment revenue to ₹595 crore, with operating profit rising 71% to ₹72 crore, supported by healthy demand and improved margins.

H1 FY27 performance

In the first six months of FY27, SRF's revenue increased 33% from ₹7,459 crore to ₹9,937 crore over CPLY. The Company's PAT increased 55% from ₹820 crore to ₹1,268 crore over CPLY.

Strategic capex announcement

The Board has approved an investment of approximately ₹600 crore to establish a battery-grade Aluminium foil manufacturing facility in India. The proposed facility, with a total capacity of approximately 12,000 metric tons per annum, will cater to both lithium-ion (Li-ion) and sodium-ion (Na-ion) battery applications. The investment is proposed to be undertaken in two phases, with Phase I expected to be completed by September 2028 and Phase II by September 2030.

What the numbers show

The divergence between revenue performance and profitability highlights significant margin pressure. While revenue grew by approximately 35%, EBITDA increased by only about 22%, leading to a nearly 200 basis point contraction in margins. This suggests that cost inflation or operational inefficiencies are eroding the benefits of top-line expansion, as profit growth (31%) lagged behind revenue growth. However, the Performance Films & Foil segment demonstrated strong operating leverage, with operating profit growing 73% against a 51% revenue increase, indicating improved efficiency in that vertical despite broader margin compression.