Specialty Chemicals, which also contributes to a majority of SRF's revenue outperformed during the quarter
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Specialty chemicals manufacturer SRF Ltd. reported weak operating performance for the September quarter owing to weakness in the packaging and textile segments.
The company's revenue was marginally below expectations, while operating performance and net profit was well below what the CNBC-TV18 poll was working with.
Revenue from the packaging business increased 24 percent from last year due to higher volumes from added capacities. However, margin was under pressure due to lower BOPET spreads due to excessive supply in the global market.
The company expects the margin for BOPET films to remain muted in the near term. Part of the weakness also stems from the high energy costs due to the prevailing geopolitical scenario, which significantly impacted the company's operations in Hungary.
SRF's Technical Textiles business underperformed in the September quarter with revenue declining 16 percent from last year. Weakness was due to subdued demand for Nylon Tyre Cord fabrics. On the other hand, Belting fabrics and Polyester Industrial Yarn Segment saw healthy growth during the quarter.
Specialty Chemicals, which also contributes to a majority of SRF's revenue outperformed during the quarter with revenue increasing 63 percent year-on-year. International revenues and better realisations contributed to the growth, as did the demand for existing, new and niche products. Margin of this particular business increased 600 basis points during the quarter, despite prices of some key raw materials remaining at elevated levels.
The board of SRF has approved another capex plan worth Rs 604 crore to set up four new plants for the agrochemical space. The capex will also be spent on expanding capacity at its Dahej facility. The board has also approved a project to develop a Kilo Lab to address the needs of the pharmaceutical market at a cost of Rs 9.8 crore.
A Kilo Lab is a pilot plant set up to perform process evaluation to support early, pre-clinical studies for pharma companies.
Shares of SRF ended unchanged on Thursday at Rs 2,547.