SRF Q2 FY27 Earnings Call: Guides Higher End of 15-20% Chemicals Growth, Rs. 600 Cr Battery Foil Plant Approved

SRF Ltd held its Q2 FY27 earnings call on October 21, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Strong Top Line, EBIT Growth Trails Revenue

• Q2 FY 2026-2027 consolidated revenue of Rs.4,904 crore (+35% YoY) — operational EBIT Rs.816 crore (+26% YoY) and PAT Rs.509 crore (+31% YoY); EBIT growth lagging revenue growth signals cost-side pressure.
• H1 FY 2026-2027 revenue of Rs.9,937 crore (+33%) — operational EBIT Rs.1,932 crore (+44%) and PAT Rs.1,268 crore (+55%), with H1 profitability growing faster than the top line.
• Q2 segment revenue — chemicals +25% YoY to Rs.2,079 crore (from Rs.1,667 crore); performance films & foils +51% to Rs.2,122 crore (from Rs.1,408 crore); technical textiles +25% to Rs.594 crore (from Rs.474 crore).
• Chemicals grew ~25% YoY in H1 FY 2026-2027 (analyst-cited figure) — CFO Samir Kasyap did not quantify the volume/price/FX split but noted refrigerant gas prices stayed firm and specialty volumes held at Q1 FY 2026-2027 levels.
• Q2 headwinds — geopolitical developments, supply chain disruptions, high raw material prices and elevated freight costs weighed on the quarter; specialty chemicals operating in a challenging environment with excess capacity.

Baseline-Period Maximization, US Softness, HFO Roadmap

• HFC plants to run "absolutely flat out" at least through December 2026 (FY 2026-2027) — utilization currently "very maximized" to lock in baseline-period quota; this operating approach expected to continue through FY 2027-2028.
• Management declined to quantify HFC capacity at the end of the baseline period (analyst referenced end of Q3 FY 2026-2027, with ~2 months of the baseline period remaining at call time), saying only that the incremental expansion is "progressing very well" and Dahej repurposing will reach required levels "well in time."
• US buying "very differently" versus tradition — somewhat softer with a different product mix; management expects the trend to continue and views it as playing out well for SRF, since other players may struggle to fulfill US demand at meaningful scale and any US softness frees capacity for newer markets.
• Newer-market expansion not at the cost of profitability — SRF realized better prices in some newer markets, whose buyers have compelling needs (including from a quota standpoint) to be well positioned by end-December 2026.
• HFO project at Gopalpur, Odisha on track — key regulatory approvals secured; applying SRF's standing view that any new plant needs 8-12 months to stabilize, reasonably larger HFO volumes/revenue are expected 10-12 months after the announced February 28 readiness timeline; management expects SRF to be among the top 3-4 refrigerant gas manufacturers globally.
• HFO go-to-market largely Western world-oriented in the initial couple of years — leveraging SRF's entrenched distribution and customer base; no significant incremental investment expected beyond some marketing effort.
• China cost competition flagged as "the one big question mark" — CFO said the SCB business CEO would acknowledge that in refrigerant gases, unless cost structures are planned to compete with an actively competing China, "you're never going to be effective"; mitigant is SRF's own non-infringing technology, believed to be "market beating" in cost competitiveness.

Rs.600 Cr Battery Foil Bet and the ~$1 Bn Project Pipeline

• Board approved ~Rs.600 crore for a new aluminum foil facility at Jetapur, Madhya Pradesh (approved October 2026) — capacity ~12,000 MT p.a. for lithium-ion and sodium-ion battery applications plus high-end packaging foil; Phase 1 cost Rs.300 crore with completion within ~23 months of board approval.
• Universal mill design provides flexibility — a different rolling mill versus the existing plant, but capable of producing both battery-grade and high-end packaging foil, allowing output to be sold into aseptic and other high-value grades while battery qualifications continue.
• Battery foil qualification realistically seen taking close to ~2 years from the time SRF is ready (start period unspecified).
• Government's ACCPLI scheme cited as a demand driver — management expects the scheme, which incentivizes domestic battery manufacturing and mandates progressive domestic value addition, to accelerate localization of the battery supply chain and drive demand for battery-grade aluminum foil.
• ~$1 billion opportunity across new projects (period unspecified) — management declined to break it down; capacitor film already commercialized at a significant premium to vanilla film; foil Phase 1 covers about half of total planned capacity (period unspecified); remaining projects at drawing-board/lab-testing stages with further announcements expected in coming quarters.
• Second line for a sunrise product "probably" planned "sooner than later" (period unspecified) — approval already exists, though timing is not assured; management cited traction in under 6 months (as of Q2 FY 2026-2027) as the basis for being "reasonably certain."
• PVDF framed as a journey up to the battery-binder space — incremental investments "reasonably certain" but timing a function of offtake of earlier grades (period unspecified); FEP and FKM projects on track via the Chemos partnership.

Freight and Raw Material Inflation Not Fully Passed Through

• Freight inflation running at roughly 15-20% (as of Q2 FY 2026-2027) — higher in some cases depending on destination and route, driven partly by the Middle East issue and partly by longer routes; not fully passed through in price-sensitive markets, and industry-wide for anyone exporting out of India, not unique to SRF.
• Raw material pricing pressure across petro downstream and some chemicals — large parts offset via pass-through or cost optimization; on some inputs SRF has secured longer-term contracts with more fixed pricing.
• Pass-through ability differs by segment — ref gas pass-through "looking better," while in specialty chemicals full pass-through is not happening; operational efficiency improvements offset a reasonably large part of increases but not entirely.
• Management did not commit to the 15% margin assumption raised by Ambit Capital's Kumar Saumya (period unspecified) — pointed instead to pricing commentary and the existing business's expected exit position in FY 2026-2027 as the basis for analyst projections.
• No commitment to chemicals margins reverting to 28-30% in H2 FY 2026-2027 — how much of the specialty ramp trickles into EBIT/margins is "tough and premature to call" given geopolitical uncertainty; pass-through of further input-cost spikes is "still a question mark."
• Q2 FY 2026-2027 margin profiles described as representative — packaging films margins largely normalized; technical textiles contain none of the Q1 FY 2026-2027 inventory-led anomalies; ref gas margin drag from elevated input costs expected to persist until it wears off in H2 FY 2026-2027.

Registration Momentum Resumes; Pharma Traction a First

• Registrations progressed on at least 2 products since the Q1 FY 2026-2027 call — including in Brazil and a couple of other initial markets, breaking a long pause; management flagged a lag between registration and full-blown demand, with intermediate products expected to be sourced from SRF in the interim.
• Of the 6-7 AIs under development, customers have progressed their own registrations for two products in a couple of initial markets — management expects this to translate, in due course, into better visibility for SRF's supply funnel.
• First-time traction with two "very meaningful" pharma customers — on one, a product in the larger oncology space, meaningful volumes and revenue should start ticking through very quickly; on the second, details are limited but the engagement looks very promising; quantification premature at this point.
• Significant specialty revenue growth expected in H2 FY 2026-2027 vs H1 FY 2026-2027 — driven by better volumes; green shoots first flagged in Q1 FY 2026-2027 "continue to look better and greener."
• Semiconductor chemicals at commercial plant stage but sampling only at lab level external to SRF — management "a little bit away" from significant revenue but "not too far away" from opening customer-side conversations; next milestones are product optimization, customer sampling and qualification.
• R&D depth cited — chemicals: 500+ scientists/engineers, 160 patents held, 539 patent applications filed; films: 16 products commercialized across BOPET/BOPP/CPP (incl. 13 offline coatings), 35+ under development, 17 R&D collaborations with global brand owners.

Guidance Reiterated at Higher End; FX and Chemours Timelines

• Chemicals FY 2026-2027 revenue growth guidance of 15-20% reiterated — set at the start of the year; management now expects to deliver towards the higher end of this guidance for FY 2026-2027.
• Ref gas prices expected to stay stable with strong growth through FY 2026-2027 — while flagging possible cost-side impact from freight and input costs; demand and pricing expected broadly stable barring normal seasonality.
• FX risk tested — asked whether a 3-5% rupee appreciation could reverse momentum, management noted Q2 FY 2026-2027 volumes and pricing held strong despite significant INR movement between the two quarters, and sees no price softness from competition or imports at this point.
• Chemours project timelines hold — first plant commercialization on the first product guided for Q4 FY 2026-2027 and the second plant for Q1 FY 2027-2028; full-scale ramp-up over a 10-12 month window, with full-stream revenue from the Kimos project from around the start of FY 2028-2029 ("28, 29 from the start of that year is kind of reasonable to work with").
• HFO pricing post-patent — responding to a question citing current HFO prices of ~$50-60 (as of Q2 FY 2026-2027), management expects prices to decline once HFOs come off patent, with HFOs commanding a significant premium over HFC pricing; with patent expiry still ~2 years out, a specific price range is premature.
• Aluminum foil business expected to be profitable on its own by end of FY 2026-2027 — clarified as a Q4 FY 2026-2027 exit basis; capacitor-grade aluminum foil commercial sales expected in Q3 FY 2026-2027, alongside the hybrid BOPP-BOPP e-film line.
• Management remains confident of delivering a healthy H2 FY 2026-2027 — while citing global innovators' proposed supply-chain diversification away from Europe, with both China and India expected to benefit.