827,233% All-Time Gains, Rs 7.2/Share Dividends In 2023: Largecap Chemical Stock Has Buying Opportunity; WHY?

From a single-unit tyre cord manufacturer to a diversified chemicals conglomerate, SRF has come a long way. Trading near Rs 2,500 levels, SRF is added as a medium-term pick by Prabhudas Lillader analyst. Giving a technical outlook, the brokerage has set a target price of Rs 2,800 on the stock. In the trading week that ended on January 5, the stock has price has broadly dipped marginally. This brings a buying-on-dips opportunity, as the stock price has a potential upside of nearly 13% in the near term.

On January 5th, SRF shares ended at Rs 2,481.90 apiece on BSE with a market cap of Rs 73,569.68 crore.

SRF is dividend paying, and in 2023, it delivered dividends up to 72% amounting to Rs 7.2 per share. Its current dividend yield is at 0.29%.

Meanwhile, SRF's 52-week high and low is at Rs 2,636.65 apiece and Rs 2,050 apiece respectively. In a year, the stock has gained nearly 11% on BSE, while its 5-year upside is at a whopping 506%. Further, all-time gains of the stock are to the tune of a breathtaking 827,233.33% on the exchange from price levels in mid-1999 to now.

In its medium-term pick, Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher said, "The stock has taken support near 2350 levels which has formed a good base and has picked up momentum to improve the bias."

She added, "The RSI indicator has also indicated a trend reversal from the oversold zone and is going strong. With the chart looking attractive, we suggest to buy and accumulate this stock for an upside target of 2800 levels keeping the stop loss of 2350."

Earlier this week, SRF incorporated a wholly-owned subsidiary of SRF Altech to set up the manufacturing facility for the manufacture of aluminium foil. The facility has been commissioned and capitalized on 01st January 2024 at an aggregate cost of Rs 536 crore (approx).

Some of the key positives for SRF shares as per Trendlyne are:

- Debt to Equity Ratio of 0.42 is less than 1 and healthy. This implies that its assets are financed mainly through equity.

- Mutual Fund Holding increased by 0% in the last quarter to 7.39.

- Interest Coverage Ratio is 17, higher than 1.5. This means that it can meet its interest payments comfortably with its earnings (EBIT).

- Return on Equity(ROE) for the last financial year was 20.93%, more than 20% in the last financial year, indicating an efficient use of shareholder's capital to generate profit.

The price to Earning Ratio is 42.85, lower than its sector PE ratio of 111.55.

- Promoter Share Holding stayed the same in the most recent quarter at 50.53%.

In Q2FY24, SRF's consolidated revenue decreased 15% from Rs 3,728 crore to Rs 3,177 crore when compared with the Corresponding Period Last Year (CPLY). While earnings before Interest and Tax (EBIT) decreased 23% from Rs 689 crore to ₹533 crore in Q2FY24 when compared with CPLY. The company's Profit after Tax (PAT) decreased 37% from Rs 481 crore to Rs 301 crore in Q2FY24 when compared with CPLY.

Established in 1970, SRF Limited with an annual turnover of ₹14,592 crore (US$ 1.8 billion) is a chemical-based multi-business entity engaged in the manufacturing of industrial and specialty intermediates. The company's diversified business portfolio covers Fluorochemicals, Specialty Chemicals, Packaging Films, Technical Textiles, Coated and Laminated Fabrics.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.