Why Has Nuvama Cut SRF’s Target Price Despite Strong Refrigerant Gas Performance?
About SRF
SRF Limited is a diversified chemicals company with leadership positions in specialty chemicals, fluorochemicals (refrigerant gases), packaging films, and technical textiles. Over the years, SRF has built strong execution capabilities and a robust capex-led growth model across its core businesses.
Nuvama Institutional Equities has maintained a Buy rating on SRF but reduced the target price to ₹3,584 from ₹3,841, reflecting a softer earnings outlook amid continued weakness in global agrochemicals and specialty chemicals.
Q3FY26 Performance Snapshot
🔹 Q3FY26 performance came in below estimates
🔹 Global agrochemicals segment remained weak
🔹 Management cautioned on near- to mid-term recovery
The brokerage highlighted that the earnings miss was largely driven by prolonged stress in global agrochemicals, with recovery now expected to take longer than earlier anticipated.
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Segmental Performance Overview
| Segment | Key Trend |
|---|---|
| Agrochemicals | Continued global weakness |
| Specialty Chemicals | Deferred offtake and pricing pressure from China |
| Refrigerant Gases | Strong growth on firm pricing and healthy RAC/MAC demand |
While specialty chemicals faced demand deferrals and competitive pricing pressure from Chinese suppliers, the refrigerant gases segment continued to deliver strong growth, supported by tight supply and steady demand from room and mobile air-conditioning markets.
|
Key Positives
🔹 Strong refrigerant gas pricing 🔹 Healthy RAC/MAC demand 🔹 Capex-led long-term growth strategy |
Key Concerns
🔻 Slow recovery in agrochemicals 🔻 Pricing pressure from China 🔻 Near-term earnings visibility muted |
Nuvama noted that management has reaffirmed its FY26 capex guidance of ₹20–23 billion, with Odisha emerging as a key manufacturing hub to support future specialty chemical capacity additions.
Earnings and Valuation Impact
Reflecting the slower recovery outlook in specialty chemicals, Nuvama has cut FY27E and FY28E EPS estimates by 10.7% and 14.3%, respectively. Despite these revisions, the brokerage remains positive on SRF’s long-term prospects, supported by its refrigerant gases strength and disciplined capital allocation.
Broader sector sentiment can also be tracked using BankNifty Trading View.
Investor Takeaway
Derivative Pro & Nifty Expert Gulshan Khera, CFP®, believes SRF is navigating a cyclical slowdown in agrochemicals while its refrigerant gases business continues to anchor earnings stability. Near-term caution is warranted, but sustained capex execution and segment diversification support SRF’s long-term investment case. More structured market insights are available at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on SRF
Why did Nuvama cut SRF’s target price?
How is SRF’s agrochemical business performing?
What is driving growth in SRF refrigerant gases?
What is SRF’s capex plan for FY26?
Is SRF still a long-term buy?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
