SRF Shares: Chemical stocks are once again making headlines, but this time for all the good reasons.
Besides an expected recovery in sales figures in Q3, speciality chemicals like SRF and Navin Fluorine might experience a sharp jump in their bottom-line as US gas distributors announced a double-digit price hike for refrigerant gases. This sent the shares of speciality stocks on a sharp uptrend.
Navin Fluorine witnessed an increase of nearly 14% on the National Stock Exchange on Thursday. Whereas, SRF was trading at Rs 2,694.90 price level, up by almost 15% on the bourses at 11:50 am.
Other chemical stocks like Gujarat Fluorochemicals and Alkyl Amines Chemicals also experienced a sharp surge in its share price on Thursday.
As per a report by CNBC Awaaz, chemical sector expert Ajay Joshi stated that prices of some refrigerant gases are expected to rise by 15-20% from January 2025 through the end of February.
This might send the Ebitda margins of speciality chemical companies on a robust uptrend. Plus, Q3 results might add to the robust outlook.
Chemical Sector Q3 Outlook
In Q3FY25, most chemical companies under our coverage are likely to witness sales recovery year-on-year, JM Financials said in a report. For SRF and Fluoro speciality chemicals sales could see an uptick given likely pick-up of existing products.
"SRF’s 3QFY25 EBITDA is likely to be up 6% year-on-year on account of improved performance in the chemicals business, owing to recovery in the speciality chemicals business. Chemicals sales are likely to be up 3% year-on-year," the brokerage house added.
While the sector is expected to see a recovery, driven by the stabilisation of inventory levels and the impact of delivery delays and inventory buildup in China, a cautious outlook is still well-present. This is largely owing to limited visibility on whether prices will recover fully.
"Commentaries by global chemical companies suggest less visibility on price recovery and weak demand recovery for most segments (until H1FY26). However, some relief may materialise, subject to recovery in the Chinese economy and normalization of the agriculture season in Latin America," Elara Capital stated in its report.
The brokerage house is expecting a decline in overall profit after tax (PAT) led by lower volume growth.
