SRF's Specialty Chemicals Business maintained its growth momentum with 47% YoY revenue growth in FY21 despite 56% growth in FY20. Chemicals Technology Group (CTG) is SRF's in-house R&D center, which has enabled growth in the Fluorinated Molecules business and is now increasingly developing complex non-fluorinated intermediates.In Fluorochemicals revenue de-grew 4% YoY in FY21, impacted by slowdown in the Refrigerants market globally coupled with pressure on prices.

Commenting on the outlook, Motilal Oswal Institutional Equities said, "SRF's performance has been robust over the last three years, with a revenue/EBITDA/PAT CAGR of 15%/33%/42%. The stock price has seen a ~40% CAGR over this period. Earnings momentum is likely to slow due to (a) margin contraction in the Packaging Films segment and (b) slower growth momentum in Specialty Chemicals due to a high base."

"Going forward, we expect SRF to post a revenue/EBITDA/PAT CAGR of 26%/22%/26% over FY21-23. On a one-year forward EV/EBITDA basis, SRF is currently trading at 20.5x (on FY22E) - this is at a premium of ~70% each to its average trading multiple for the last three/five years. This, in our view, is rich v/s the earnings growth expectation.

We are encouraged by the long-term structural opportunity in the Chemicals sector and the company's ability to participate in the same. We maintain our Neutral stance on SRF on higher valuations," it added.

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