Candidly speaking, even I am a bit surprised to see a decline in turnover. Thats indicating a problem, something like the products are not generating enough demand. And most importantly, it has happened for the second quarter in a row. But the company is investing heavily in the productive capital…why would a company invest so aggressively in fixed assets if its into sun-set industry? And there’s little doubt about thecommitment of the management.
I amcomfortablewith thereductionin dividend. The first thing a company should do with the accruals is to expand its fixed capital base, then it should trim expensive debt, then it should set aside funds for its immediate future needs, and then if anything’s left, that should be liberally distributed. And SRF has displayed asystematicpattern of dealing with its accruals. So, if it has reduced the dividend, there must be a genuine reason for the same.
Sure, the company is going through a tough phase. But given SRF’s track record, the company will be able to get back on its feet and running smartly, once this phase is over. However, I must admit, I would like the Company to report a higher turnover in the next quarter. Thats a minimum I would be expecting. The Company is into three different businesses, and all of therm are promising ones. So, that shouldnt be a very difficult task.
< 4, P/B < 1 (way below permissible limit of 22.5 by Graham)…For a change, compare it with Astral, Kaveri, Mayur Uni. etc…Think of the replacement cost…
very good thing is that while it’s earning is increasing, the price is decreasing…I like such stocks…
BTW…what is the percentage of carbon credit in total income?
Let me know if there are more such stocks out there…I just need 10 of this…
Happy Investing!
Aksh
from 2008 to 2012 pretax profit adds up to 2500 and over the same period CER revenue is about 1500 Cr.
U can take a look at GNFC. They have done capex of about 3000Cr and have about1200Cr debt on books. Capex is coming to an end . In next 15 months all new plants should come on stream.
GNFC is good. Look at the book-value, its wonderful to get a stock at almost 50 p.c. of the book value, and that too when it is consistently reporting profits. There’s not much of a difference between GNFC and SRF. Its just that the businesses of SRF are much more diversified, whereas GNFC is more of a multi-product company where most of the products are inter-related in some way or another. Chemicals and Fertilizers are generally a similar kind of industries…
So, GNFC is also worth accumulating…but then its price is very sticky. I generally would prefer a company whose price is a bit volatile. That allows me to average…SRF moves up and down…so instead of feeling stuck, I generally tend to average when the price moves down. But yes, its more of psychology than anything else. It shouldnt bother you if you are bullish and the price isnt going anywhere…you should keep accumulating.
Another of this type of company is Garware Wallrope. The problem I am finding with this is that its neither going up nor coming down, so am unable to average.
Sales & Profits have gone down this year in relatie to last year in all the three quarters. Also this is primarily a B2B business so a lot depends on industrial performance. Whats worrisome is that even their Technical Textile sector is showing muted growth. With the price falling the story is becoming interesting everyday worth a watch for a potential turnaround lateron.
SRF Ltd has informed BSE that the Government of India,
Ministry of Finance (Department of Revenue) vide Notification No.
30/2015-Customs (ADD) dated June 12, 2015, has extended the
applicability of its Notification No. 41/2009-Customs, dated April 29,
2009 for a further period of five years, imposing an anti-dumping duty
on the imports of Nylon Tyre Cord Fabric (NTCF) originating in, or
exported from , the Peoples Republic of China.
The latest information is that SRF is seeking to raise 2000Cr as part of Non-convertible debentures. This can be found in the AGM notice that was provided to BSE.
SRF just underwent a major capex and as per the last (Qtr ending May 2015) conference call, the information that was provided was that there was no CapEx planned.
Seems like there is a change is a change in business strategy.
Just adding more twist to tell. In case you like SRF, it would be better idea to invest in SRF through Kama Holding Limited (earstwhile SRF Poly). The promoter’s majority holding in SRF is held through Kama Holding. For each share of Kama, one would get 4.65 share of SRF, with price of almost one share of SRF. While I appreciate holding company discount would always remain, I am positive for following reasons:
SRF 10 Dividend result in Rs 46.5 dividend being received by Kama. Kama last year paid Rs 20 per share is dividend. So I see a dividend leverage in Kama
Clean business of Kama, which virtually no other line of business except some education business with nominal financial.
Relative good management of SRF which have rewarded minority shareholder with good dividend in past, and getting 80% discount to holdco, I feel is very high.
Discl: I am holding SRF as well Kama Holding in my portfolio. Also, investor is advised do his/her own due diligence as my view may be biased due to my holdingd
Setting up a ‘BOPP Film Line and a Metallizer’ at a investment of Rs. 269 crore
SRF held conference call to discuss the performance for the quarter ended March 2016. Senior Management of the company addressed the call.
Highlights of the Concall
SRF reported 82% increase in its consolidated net profit after tax (PAT) at Rs. 109 crore for the quarter ended March 31, 2016 as against Rs. 60 crore posted in the year ago period. The company’s consolidated EBIDTA at Rs. 234 crore for the fourth quarter of 2015-16 also increased by 43% over the corresponding period last year (CPLY). The consolidated net sales of the company grew by 3% at Rs. 1093 crore during the quarter.
SRF posted 40% growth in consolidated net profit after tax (PAT) at Rs. 423 crore for the fiscal ended March 31, 2016 even as the net sales of the company grew only marginally from Rs. 4492 crore in 2014-15 to Rs. 4531 crore in 2015-16. The consolidated EBIDTA of the company also improved by 26% from Rs. 791 crore during 2014-15 to Rs. 999 crore during 2015-16.
The segment revenue of Technical textiles business declined 14% at Rs. 1746 crore during the year due to low crude oil prices coupled with the disruption of production in one its major manufacturing units at Manali during the Chennai flood in December 2015. The operating profit for the Technical textiles business also reduced by 12% from Rs. 196 crore to Rs. 173 crore during the same period.
Nylon Tyre Cord Fabric (NTCF) revenue was impacted by low crude oil prices. Disruption of operations at Manali facility impacted business over three months. Normal operations of the plant has commenced from April 2016 onwards.
Coated Fabrics business witnessed a healthy turnaround with improved market share. The company is focusing on emerging as a solution provider to customers than a product provider.
Laminated Fabrics maintained its market share and price premium in a tough competitive environment. Hot Laminated facility operating is at desired levels.
Domestic demand for belting fabrics remained low on account of slow infrastructure developments. Margin pressure was on account of aggressive pricing by China in international markets.
The Chemicals & Polymers Business of the company reported a 23% growth in the segment revenue at Rs. 1555 crore and 31% increase in its operating profit from Rs. 298 crore to Rs. 389 crore during April-March 2015-16 over CPLY.
In Fluorochemicals business projects for R-32 and R-134a–pharma (phase 1) was manufacturing commissioned during the quarter R-32 is being launched in Indian & US market during Q4FY16. The company has successfully achieved 100% transition of Dymel customers within a year of acquiring brand from Dupont. It has also improved its market share in HFC Blends- R-134a replacement market share improved while Exports of R-134a increased 4 times.
In Q4FY16, the company has approved an investment proposal for setting up a pilot plant to manufacture next generation refrigerant gas, HFO 1234 yf
In Specialty chemicals business Agro industry remains under pressure globally while there was pressure on realisations. The company is focusing on pharmaceutical intermediates yielding positive response and exploring new markets in US / Japan for Pharma products.
The Packaging Films Business reported more than 200% growth in its operating profit from Rs. 64 crore in 2014-15 to Rs. 193 crore during the same period riding on the improved performance of both its overseas units.
Packaging films business reported robust financial performance in FY16. All plants operated at full capacity despite challenging market conditions. Both international units based in Thailand and South Africa registered healthy performance leading to strong operating profits.
The company has approved a capex proposal for setting up a ‘BOPP Film Line and a Metallizer’ in the existing Domestic Tariff Area (DTA) campus at Indore at a total investment of around Rs. 269 crore. With a maiden domestic entry into the space of BOPP films, SRF aims to emerge as a ‘one stop shop’ for its customer’s mainly in India. The proposed project will be the second BOPP unit for SRF, the first one was set up at Durban in South Africa in 2012. Proposed capacity expansion of 35,000 MT in Domestic Tariff Area campus at Indore – project is scheduled to be commissioned in the last quarter of FY18.
Driven by the robust FMCG growth and fast urbanization, Packaging films business domestic market in India is expected to grow by 10% -12%.
This is to inform about the capitalization and commissioning of the first phase of the project for setting up of Bi-axially Oriented Polypropylene (BOPP) Film line.
The capital expenditure on Metallizer, Infrastructure and certain other items has since been capitalized & commissioned as on 30th September, 2018.
The consolidated gross sales of the Company grew by 48% from 11,270 crore to 11,882
crore in Q2FY19 when compared with Corresponding Period Last Year (CPLY). The Company
reported an increase of 47% in its consolidated Profit after Tax (PAT) from 1103 crore to
1151 crore in Q2FY19 over CPLY.
Commenting on the results, Managing Director, Ashish Bharat Ram said “We have had a
good start to the year. With the revival of the Specialty Chemicals Business from the second
half of the current year, we are optimistic of an overall healthy performance going forward.”
My interpretation/opinion -
Excellent result and more importantly good forward looking commentary from the management on the agro-chemical business.
If we look carefully the capital employed by the Chemical business segment is around 4500Cr but the quarterly revenue is at 500Cr (2000Cr annualized). So essentially their ROA is 0.5. This along with the statement from the management that they see rebound in the AgroChem space augurs well. Even if they just do 4000Cr of revenue from Chem business in next couple of years with 20% operating margin along brings 900Cr EBITA. Couple this to what they are trying to do with the refrigerants (creating brand) in India. Could this be what Asian Paints did to the Paint industry (need not be at the same scale).
Adding more to this is the BOPP/BOPET line of business where-in the european plant will start operating from FY20 (hopefully). All else being equal this is great position to be in.
SRF Limited (NSE: SRF), a chemical based multi-business entity engaged in the manufacturing of industrial and specialty intermediates announced today that it has entered into a definitive agreement to sell its Engineering Plastics Business to DSM, the Life Sciences and Materials Sciences company in an all-cash transaction, amounting to INR 320 cr.
The company’s Engineering Plastics Business manufactures multiple grades of engineering plastic compounds, catering to the automotive and electrical industries.
"Today marks a significant milestone for our company, as we take another step along our strategic direction of focusing on our core Businesses, "said Ashish Bharat Ram, Managing Director, SRF Limited. “While the Engineering Plastics Business has been a profitable and niche business for us, we felt that scaling it into a large business would have taken significant time and in that sense passing it onto a credible player would be logical for everyone involved.”
SRF is a proxy to AIR CONDITIONER and refrigerator market.
Air conditioning and refrigeration has lot of potential going ahead.
Cold storage and food processing also requires lot of refrigeration.
Added to that SRF is into specialty chemicals for agri inputs.
The future appears to have lot of promise.
