SRF Limited

SRF Q4FY23 CONCALL

SOIC

-Chemical business performed extremely well. Quality of earnings have improved as chemical business contributes majorly to the profits.

-41% Growth in Chem business this year. Higher than earlier guidance. *Will do 20%+ growth in FY24 in chemical business. Roce might moderate as growth accelerates.

-7 new plants coming in spechem business and 3 new in Fluoro speciality (ref gas).

-Expect 7-8 intermediates projects to fructify over the next few years. Want to enter PHARMA cdmo either via organic or inorganic.

-Cool summer in India hasnt been good for us in Ref gas. Q1 can be soft.

-Commissioning for PTFE is expected to happen. Strategy on next gen HFO gas has shaped up well.

-Working on next range of industrial chemicals for import substitution. Beyond chloromethanes.

-Looking at land adjacency to our land in Dahej.

-BOPET and BOPP business remains in cyclical downturn. Lot of capacities are shutting down due to cash losses. Forecasting things to improve from here on. As lot of capacities are being shut.

-Aluminium foil will make SRF few companies globally which can make BOPP, BOPET and Aluminium foil.

-Prices of generic agri has fallen. Majority of our business (85%) is driven by innovator business. Not seeing any demand reduction. In fact, looking at position to capitalise on new opportunities coming from 7-8 new AI’s over next 2 years.

-US will have 30% cut in R124 not just in consumption but also in production. US will remain a net importer of HFC.

-Post expansion also seeing opportunities in MIDDLE East. Will ramp up R32 completely in next 1-2 years.

-Fluoropolymers: our technology will be PFOA free. Will ramp it up in the future.

-Majority of spechem projects will be capitalised in H2FY24.

-PTFE will commission by end of May or mid of June. Q3&Q4 will see revenues from PTFE.

-Will start seeing some positives in Packaging business in FY24.

-Agro demand slowdown is majorly for Generics.

-1200-1300 crores of cash to be spent in FY24. Will get to 2500 crores in terms of cash spent on capex in FY24.

-Speciality was 4200 and 3200 crores was Fluoro Gas:- Break up of Speciality vs Ref gas.

-ROCE in excess of 25-26% are more than good for us to take up projects.

-To be a large player in pharma, we have to look at CDMO in pharma either through organic basis or through an acquisition.

-As we take the PTFE journey, it will take 12months to get more into speciality grades.

-No impact on HFC134 (Pharma) there will be no impact due to cut down in USA.

-The AI’s we are putting up plants for: patented molecules(largely) and in the process of getting contracted. Will be commercialised next FY.

-Margins in both Fluoro-Speciality and Ref gases have expanded.

-Dedicated plants are full and MPP have spare capacity.

-AI’s contribute only 10-15% in overall mix. Will increase going forward.

-Fairly confident of margins we have delivered. Some tempering of the margins vs Q4 (What we reported).

-Groundwork already being done around HFO’s.

-Demand is still rising, regulatory environment is restricting the product- Ref gases. Think market will remain tight.

-In June-July: R32 will get capitalised.

Disc: no reco to buy or sell. No buy or sell transaction in last 30 days.