SRF (SRF IN) – Q4FY26 Result Update – Agrochemical uncertainty persists – Downgrade to ‘REDUCE’

We downgrade SRF to ‘REDUCE’ due to continued pricing pressure and demand uncertainty across the specialty chemical portfolio. SRF reported consolidated revenue of Rs46bn in Q4FY26, registering a growth of 7% YoY and 24.3% QoQ. The Chemicals segment remained the primary growth driver, delivering a strong 34% QoQ increase (+4% YoY). Within this, the Fluorochemicals business witnessed robust performance, led by higher volumes and improved realizations, while pricing pressure across the specialty chemicals portfolio persists. The Performance Films & Foil segment also posted a healthy growth of 13% YoY and 19% QoQ, with margins expanding by 250bps sequentially, supported by China’s anti-involution measures. The aluminum foil business saw a pickup in exports during the quarter and is expected to further ramp up, backed by customer approvals. The Technical Textiles segment, which remained under pressure through most of the year, is now showing early signs of recovery, with EBIT margins improving by 360bps QoQ. On the capex front, the company has revised its HFO investment upward from INR11bn to INR22.9bn and is also undertaking debottlenecking of its HFC capacity, taking total capacity to ~65,000mtpa. While the company continues to benefit from current strong realizations in the refrigerants segment, subdued demand in agrochemicals and persistent oversupply from Chinese players remain key concerns. We maintain a cautious stance on the stock and downgrade to REDUCE rating, with an SOTP-based target price of INR2,579.