Analyst Concall
SRF says low China chemical prices not sustainable long-term
This story was originally published at 21:13 IST on 20 January 2026
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--SRF: Low China speciality chemical pdt prices not sustainable in long run
--CONTEXT: SRF management's comments in post-earnings concall with analysts
--SRF: On track with INR 22 bln capex plan for FY27
--SRF: Most capex spending is on Odisha plant
--SRF: Working on setting up new generation gas units
--SRF: BOPP packaging film prices improving on China output cut
--SRF: US tariff on R32 gas impacting sales of product
--SRF: Pharma intermediates ops currently account for 10% of sales
--SRF: Aim to achieve 25% of sales from pharma intermediates ops
--SRF: May cut R32 gas exports if domestic demand improves
--SRF: Facing pricing headwinds in speciality chemicals business
--SRF: Jan-Mar speciality chemical ops may see more traction vs Oct-Dec
By P. Madhu Kumar and Narayana Krishna
MUMBAI – SRF Ltd. believes the competition from China in terms of pricing and volumes will not last long as the low pricing of speciality chemicals by Chinese companies is not sustainable in the longer term and the market is likely to see prices steadying in the segment soon, the management told investors and analysts in a post-earnings conference call Tuesday. For now, however, pricing pressure remains an issue in speciality chemicals, the company said.
SRF's speciality chemicals business has been seeing increased competition from Chinese suppliers who are offering products at much lower prices, mainly because of spare capacity in China. This has led to pricing pressure in key products such as hydrofluorocarbons, including R-125, or pentafluoroethane, and R-32, or difluoromethane, where cheaper Chinese imports have reduced realisations and limited SRF's room for manoeuvre.
The speciality chemicals maker reported a rise of nearly 60% on year and 11% on quarter in net profit for the December quarter to INR 4.33 billion, above analysts' estimate of INR 4.14 billion. Its sales for the quarter were INR 37.13 billion, up over 6% on year and 2% on quarter. Analysts had projected the company's top line at INR 37.17 billion.
The company expects revival in demand in its speciality chemicals business during the March quarter. Earlier, it had expected to see this revival in the December quarter.
In terms of its core chemicals business, the company said sales of the R-32 refrigerant are likely to be affected by the US tariffs on goods from India. The tariffs have not yet been extended to pharmaceutical and chemical products. If and when they are, sales of R-32 gas are likely to come under pressure, the management said. On the demand-and-supply position of the gas, the management said it is balanced but if domestic demand improves, it may think of reducing exports of R-32.
The management was unsure whether the R-134A refrigerant, or 1,1,1,2-tetrafluoroethane, will fall under US tariffs, but it has been able to get into long-term contracts nonetheless. "So, you know, in R-134A, we have been able to do long-term contracts and, you know, that's a relationship that has not got affected with the tariffs," the management said.
The management was confident of spending INR 22 billion under its capital expenditure plan for the financial year 2026-27 (Apr-Mar). Most of the capital expenditure will be on its facility in Odisha. "Irrespective of whatever volatility we may be seeing on the global front, the transition to the new generation gases is something that is inevitable," the management said. The company added that it is working to set up new-generation gas plants.
Prices of biaxially oriented polypropylene, or BOPP, film were subdued during the quarter on account of low pricing by Chinese companies, but the company sees some relief from the pricing pressure from December onwards, which will be reflected in the pricing in India from January, it said.
The company said its pharmaceutical intermediates business currently accounts for 10% of its total revenue and it aims to take the share of this segment to 20-25%. "... we're starting to see the momentum on the pharma side," the management said. "And that's really why we are going with this pharma intermediate plan. Number two, is because we feel that we now need that plan based on the number of molecules, et cetera, we're working on. I'm not saying that we want to get to 20% overnight, but I think we're clearly on track to start moving in that direction."
Tuesday, shares of SRF ended nearly 3% lower at INR 2,883.20 on the National Stock Exchange. End
Edited by Rajeev Pai
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