SRF Ltd. (NSE: SRF) opened the trading session at 6.5% lower after a filing that disclosed a 31.2% YoY jump in net profit to ₹509 crore, missing the ₹650 crore estimate that had buoyed the stock to a 12‑month high.
Revenue surged 34.7% to ₹4,904 crore, with EBITDA rising 18.4% to ₹1,090 crore, yet the EBITDA margin contracted from 21.3% to 22.2% YoY, signalling pressure on the cost side. Analysts at Bloomberg noted that the drop in margin is the first in two quarters, a deviation from the 24.5% average margin seen by peers in the chemicals sector.
The chemicals arm continued to wrestle with global price volatility and excess Chinese capacity, which have tightened gross margins across the industry. According to the filing, the company’s raw‑material costs climbed 8.5%, eroding the previously robust 25% margin. SRF’s CFO, Sanjay Rao, cautioned that “price sensitivity in the base‑chemical market is higher than usual, and we are watching inventory levels closely.”
Looking ahead, SRF has not issued new guidance for FY28, but the management briefing on May 30th hinted at a cautious outlook, citing “continued volatility in raw‑material prices” and a need for “operational efficiency drives” to stabilize margins. The company will report Q3 results on June 20th, and market watchers will be keen to see if the margin trend reverses or if the pricing pressures persist.
BSE: SRF also trades on BSE under the same ticker, and the stock’s intraday volatility has increased 12% since the earnings release, suggesting that traders are re‑pricing risk.
Sector analysts project that the chemicals industry could see a 0.5% margin compression in FY28 if global supply continues to outpace demand, which would further weigh on SRF’s profitability trajectory.