This multibagger stock doubled investors' money in FY22; more upside likely
Long-term investors have made big gains by investing in the stock as it has surged over 5,000 per cent in the last ten years.
- Apr 1, 2022,
- Updated Apr 1, 2022 2:11 PM IST
Shares of SRF Limited have doubled investors' money in the last 12 months. In the past one year, the share price jumped from Rs 1,148.65 to Rs 2,713.45, logging around 136 per cent return in this period.
An amount of Rs 5 lakh invested in this multibagger stock a year ago would have turned into Rs 11.8 lakh today.
Long-term investors have made big gains by investing in the stock as it has surged over 5,000 per cent in the last ten years.
With a market capitalisation of more than Rs 77,000 crore, the shares stand higher than 20-day, 50-day, 100-day and 200-day moving averages but lower than 5 day moving averages.
Should you consider the stock?
Brokerage house ICICI Securities believes that the company is well poised to expand into newer and more complex areas (such as fluoro-chemicals) by leveraging on its strong pedigree.
"We initiate coverage under Stock Tales format with a BUY rating and value SRF on SOTP to arrive at a target price of Rs 3065," it said.
In packaging, the company has earmarked a capex of Rs 425 crore towards aluminium foils to tap the import substitution theme (domestic import of aluminium foil) with an expected asset turn of 1.75-2x. The company is targeting the import market share of mid-teens initially. "Going ahead, we expect strong incremental traction from existing customers," the brokerage house noted.
It also highlighted that control over working capital along with better operational performance will improve FCF generation. Prudent capital allocation towards high RoCE generating businesses will improve return ratios further.
Commenting on specialty chemicals space, Kotak Institutional Equities said, “We believe fundamentals of specialty chemicals companies continue to be strong. Valuations may see some correction as CoE reverts closer to pre-Covid levels. Companies are better placed to handle the current increase in crude prices (last seen in FY2013-14) given presence in more downstream products, volume-led growth and improved competitiveness versus Chinese peers.”
Kotak also likes SRF and believes any meaningful correction may provide good entry points.
Q3 Performance
The company reported over 56 per cent rise in its consolidated net profit at Rs 506 crore for the quarter ended December 2021 and has revised its annual revenue growth outlook to around 37 per cent. Profit in the year-ago period stood at Rs 324 crore.
Revenue from operations rose to Rs 3,346 crore in the same quarter from Rs 2,146 crore in the year-ago period. The board also approved a second interim dividend at the rate of 47.5 per cent amounting to Rs 4.75 per share.
About the company
SRF Limited is a chemical-based multi-business entity engaged in the manufacturing of industrial and specialty intermediates.
The company’s business portfolio covers Fluorochemicals, Specialty Chemicals, Packaging Films, Technical Textiles, Coated and Laminated Fabrics. Tanya Aneja
Shares of SRF Limited have doubled investors' money in the last 12 months. In the past one year, the share price jumped from Rs 1,148.65 to Rs 2,713.45, logging around 136 per cent return in this period.
An amount of Rs 5 lakh invested in this multibagger stock a year ago would have turned into Rs 11.8 lakh today.
Long-term investors have made big gains by investing in the stock as it has surged over 5,000 per cent in the last ten years.
With a market capitalisation of more than Rs 77,000 crore, the shares stand higher than 20-day, 50-day, 100-day and 200-day moving averages but lower than 5 day moving averages.
Should you consider the stock?
Brokerage house ICICI Securities believes that the company is well poised to expand into newer and more complex areas (such as fluoro-chemicals) by leveraging on its strong pedigree.
"We initiate coverage under Stock Tales format with a BUY rating and value SRF on SOTP to arrive at a target price of Rs 3065," it said.
In packaging, the company has earmarked a capex of Rs 425 crore towards aluminium foils to tap the import substitution theme (domestic import of aluminium foil) with an expected asset turn of 1.75-2x. The company is targeting the import market share of mid-teens initially. "Going ahead, we expect strong incremental traction from existing customers," the brokerage house noted.
It also highlighted that control over working capital along with better operational performance will improve FCF generation. Prudent capital allocation towards high RoCE generating businesses will improve return ratios further.
Commenting on specialty chemicals space, Kotak Institutional Equities said, “We believe fundamentals of specialty chemicals companies continue to be strong. Valuations may see some correction as CoE reverts closer to pre-Covid levels. Companies are better placed to handle the current increase in crude prices (last seen in FY2013-14) given presence in more downstream products, volume-led growth and improved competitiveness versus Chinese peers.”
Kotak also likes SRF and believes any meaningful correction may provide good entry points.
Q3 Performance
The company reported over 56 per cent rise in its consolidated net profit at Rs 506 crore for the quarter ended December 2021 and has revised its annual revenue growth outlook to around 37 per cent. Profit in the year-ago period stood at Rs 324 crore.
Revenue from operations rose to Rs 3,346 crore in the same quarter from Rs 2,146 crore in the year-ago period. The board also approved a second interim dividend at the rate of 47.5 per cent amounting to Rs 4.75 per share.
About the company
SRF Limited is a chemical-based multi-business entity engaged in the manufacturing of industrial and specialty intermediates.
The company’s business portfolio covers Fluorochemicals, Specialty Chemicals, Packaging Films, Technical Textiles, Coated and Laminated Fabrics. Tanya Aneja