SRF Q2 FY27 Results (NSE: SRF)
Signal: Margin pressure
The read
The growth mix improved materially, with standalone revenue up 33.5% YoY to ₹3808.61 crore and PFB revenue up 68.5%, but the margin arc weakened sequentially: operating margin fell to 16.78% from 21.30% in Q1FY27 despite gross-margin expansion to 49.84%. PAT growth of 20.9% remained supported by lower finance costs and no exceptional charge, while higher receivables, inventory and capex reduced cash conversion.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹3,808.61 Cr | +33.5% | +0.2% |
| Net profit | ₹438.48 Cr | +20.9% | |
| EPS | ₹14.79 | +20.9% | |
| EBIT margin | 16.78% |
P&L walk
Standalone revenue increased 33.5% YoY to ₹3808.61 crore, while gross margin expanded to 49.84% but reported operating margin declined to 16.78% from 18.75% as employee, power, exchange and other costs rose; PAT still grew 20.9% to ₹438.48 crore.
Segments
Chemicals remained the earnings anchor with ₹2078.05 crore revenue and ₹538.85 crore segment result, while Performance Films and Foil was the growth leader with revenue up 68.5% YoY to ₹1028.21 crore; TTB revenue grew 25.5% but its result rose 71.2% to ₹72.17 crore.
Key positives
- Standalone revenue increased 33.5% YoY to ₹3808.61 crore, with Performance Films and Foil revenue up 68.5% to ₹1028.21 crore.
- Gross margin expanded 531bps YoY to 49.84%, although the filing does not disclose the reason.
- Employee costs rose 12.1% YoY to ₹256.38 crore, materially slower than revenue growth of 33.5%, providing partial cost absorption.
- Chemicals remained the largest profit contributor at ₹538.85 crore segment result, while TTB segment result rose 71.2% YoY to ₹72.17 crore.
- PAT and EPS both rose 20.9% YoY, indicating no material dilution; paid-up equity share capital remained ₹296.42 crore.
Key concerns
- Operating margin contracted 197bps YoY and 452bps QoQ to 16.78%, reversing the 21.30% margin reported in Q1FY27.
- Operating cash flow fell to ₹402.07 crore in H1FY27 from ₹901.64 crore in H1FY26 while H1 revenue rose to ₹7610.58 crore from ₹5893.13 crore.
- Trade receivables increased to ₹2563.88 crore from ₹1947.72 crore and inventories to ₹2540.61 crore from ₹2124.41 crore, increasing working-capital intensity.
- Raw material cost increased to 51.08% of revenue from 50.03% YoY despite gross-margin expansion, leaving the source of gross-margin improvement unclear.
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