SRF Q3 FY26 earnings call

Where management's figures differ from the filing

• Operating profit measure and margin: said EBIT up 23% YoY to ₹653 cr, margin 18%; filed EBITDA ex OI ₹706.73 cr, margin 19.0%. Management labelled the line EBIT; filed results define the comparable figure (PBT + finance costs + depreciation − other income) as EBITDA. The gap of ~₹54 cr is consistent with depreciation and the EBITDA-vs-EBIT definitional difference.

What moved the numbers, as management explained it

• Specialty Chemicals EBIT margins contracted 170-180 bps sequentially on irrational Chinese pricing; management said pricing, not volume, was the main drag.
• Fluorochemicals delivered a record quarter on firm global HFC prices supported by China's quota-led supply restrictions and steady international demand despite lean season.
• Performance Films domestic volumes for BOPET and BOPP were weak as FMCG customers worked through GST 2.0 repack and reprint requirements.
• Recognised ₹73 cr charge under exceptional items for changes in definition of wages post the new Labor Codes notification. (one-off)
• Recognised ₹99 cr credit to tax expense on a favourable ITAT order received during the quarter. (one-off)
• Forward positions on rupee-dollar hedges had a negative impact due to unprecedented rupee depreciation, despite benefits from global interest rate reductions.

The numbers management led with

• Q3 FY26 EBIT: INR653 crore, up 23% YoY (margin 18%)
• Q3 FY26 PAT: INR433 crore, up 60% YoY
• FY26 capex guidance: INR2,200–2,300 crore (maintained)
• Odisha first-stage capex (FY27): INR1,500–2,000 crore for new-generation refrigerant gases

Guidance on this call

By business

Balance sheet, capex and funding

• FY26 capex on track at the previously guided ₹2,200-2,300 cr; FY27 capex seen as remaining on a strong wicket.; we seem to be on track for that
• First stage of investments at the new Odisha site for next-generation refrigerant gases estimated at ₹1,500-2,000 cr.; INR1,500 crore to INR2,000 crore
• Additional ₹180 cr committed for a second pharma intermediate plant at Dahej, commissioning in 8 months.; investment of INR180 crore
• Second interim dividend of ₹5/share approved, cash outflow of ₹148.21 cr, after ₹4/share first interim on 23 July 2025.; second interim dividend of INR5 per share, entailing a cash outflow of INR148.21 crore
• Forward covers on rupee-dollar to keep weighing on results for a few more quarters; weak rupee otherwise favourable.; negative impact from forward covers to stay for a few more quarters

The industry, as management sees it

Management sees Chinese HFC supply discipline and the Kigali Amendment driving a transition to new-generation gases, with India demand-supply expected to stay firm in the short term. Specialty Chemicals remains in a tough cycle with Chinese pricing pressure persisting but management believes the situation is unsustainable and the correction is a 'when, not if'. Crop-protection is showing early signs of revival after a weak 2 years.

Risks management named

• Chinese pricing pressure on Specialty Chemicals; timing of any correction uncertain
• US tariff uncertainty on R32 has shifted trade from annual to month-to-month transactional pattern
• FX forward cover losses on rupee-dollar hedges to persist for a few more quarters
• Technical Textiles/Coated Fabrics demand soft due to cheaper Chinese imports and weak Jal Jeevan offtake
• Domestic HFC capacity exceeding demand, requiring export dependency

Not answered directly

• Specialty Chemicals vs Fluorochemicals 9M revenue split (deferred to annual call)
• Domestic vs export mix for specialty and ref gas (referred to IR)
• Exact R32 capacity and any future R134a/R125-to-R32 reallocation (kept confidential)
• Pharma customer, molecule, and CGMP details (deferred to annual call)
• Percentage growth in chemicals driven by refrigeration gases (deferred to annual call)

Asked for a number, answered without one

• Domestic vs export mix for Specialty and Refrigerant gas businesses: Asked the analyst to connect with the IR team separately to get the split shared.
• 9M FY26 revenue growth split between Specialty Chemicals and Fluorochemicals: Said policy is not to differentiate between Fluorochemicals and Specialties; will revisit at the annual call.
• R32 capacity at SRF: Declined to comment on what capacity is or isn't, calling it part of strategy to maintain a baseline.
• Refrigerant gases share of growth in the overall Chemicals business: Said they do not differentiate between Specialty and Fluorochemicals and will share the number only at the annual results call.
• China R32 capacity: Said there is a lot of fungible capacity between R134a, R32 and R125, so there is no straightforward answer; China gives quotas on a product basis, not GWP.

Every question, with its answer

1. 1. Capex outlook and FY27

   Arjun Khanna, Kotak Mutual Funds

   Question. What's the capex outlook given global trade dislocation and tariffs? Q2 had guided INR2,200–2,300 crore for FY26; how does this pan out for FY27?

   Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. We are on track for the FY26 capex. A majority of spend will shift to the new Odisha site for two new-generation gas plants plus ancillaries. First-stage Odisha investment is likely INR1,500–2,000 crore, so FY27 capex also remains on a strong wicket. The transition to new-generation gases is inevitable under Kigali; SRF wants to be a technology and capex-efficient beneficiary.

   Follow-up. Given the FY25 slowdown to ~INR1,200 crore, you don't see a reason to attenuate capex going forward?

   Answer. No. HFC demand will fall, new-gen gas demand has to be met, and those with technology, capex-efficient, and opex-efficient plants will benefit — that's the SRF play.

2. 2. Specialty Chemicals Q4 outlook

   Arjun Khanna, Kotak Mutual Funds

   Question. Specialty Chemicals guidance says Chinese competition continues near-term, but Q4 is expected substantially better — these seem dichotomous. Can you reconcile?

   Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. Q4 is driven by pent-up POs deferred from Q2/Q3 that have to be delivered. However, a structural pickup is not yet 100% certain; Chinese pricing remains a challenge. Generating current returns in such a subdued market makes management optimistic — Chinese players are struggling at these levels and 'the question is not if, but when' the environment changes.

   Partly answered.

3. 3. BOPET/BOPP China pricing

   Arjun Khanna, Kotak Mutual Funds

   Question. Early signs of Chinese price increases in petrochemicals were mentioned — are we seeing margin expansion in BOPET/BOPP?

   Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. China linked to BOPET specifically. Authorities in China instructed the industry to focus on profitability over volume, mandating a 20% capacity cut in December; pricing has already firmed. Post-Lunar holidays a further cut is mandated, which could drive further margin expansion. Confirmed this is the 'anti-involution' drive.

4. 4. Agchem Q4 confidence

   Jason Soans, IDBI Capital

   Question. What gives confidence on a Q4 agchem pickup? Is there enhanced order visibility for key products?

   Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. After a subdued Q2/Q3, a lot of pending POs that customers wanted delivered this year now need to be acted on; nobody wants inventory on December 31. SRF saw the same pattern last year and has confirmed POs to deliver in Q4.

   Follow-up. Is channel inventory at reasonable levels? Why the deferral?

   Answer. Deferral hypothesis: post-COVID supply chain normalised, customers comfortable that material will be available if ordered, so they wait. Hard to comment definitively.

5. 5. Pharma plant 2 opportunities

   Jason Soans, IDBI Capital

   Question. More colour on the INR180 crore second pharma plant: what opportunities, how much can it scale?

   Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. Agro is mainstay but cyclical; SRF wants to derisk. Pharma is 'a much tougher nut to crack' but momentum is building — molecules and customer counts both up significantly. The new plant is a proactive bet, not reactive. Not specified CGMP, but detailed pharma strategy to be shared at the annual call.

   Partly answered.

6. 6. US tariff impact on R32 and Packaging

   Vivek Rajamani, Morgan Stanley

   Question. On tariffs — what impact have you seen this quarter by way of volumes, geographic shifts, or customer conversations?

   Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. Mixed bag. R-134a is not under tariffs, so long-term contracts there are intact. R-32 is under tariffs; customers have shifted from annual contracts to month-to-month transactional buying with wait-and-watch. In Packaging, some US business moved from Thailand to India, but Thailand-to-US freight is materially higher, so SRF loses on logistics.

   Follow-up. Any comments on the agchem side?

   Answer. Nothing new to add beyond earlier remarks. Internal strategy is to keep pipeline robust; a lot of AIs in the pipeline awaiting registration. Cycle will turn eventually.

7. 7. Specialty 9M growth

   Abhijeet Akella, Kotak Securities

   Question. Could you share Specialty Chemicals revenue growth in the first 9 months?

   Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. Policy is to not differentiate Fluorochemicals from Specialties intra-year. Detail to be shared at the annual call.

   Not answered directly.

8. 8. Chemical segment margin

   Abhijeet Akella, Kotak Securities

   Question. Chemical segment margin moderated 170–180 bps QoQ — is that from Specialty Chemicals or R32 tariffs?

   Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. Margin moderation is from Specialty Chemicals, not R32. Better performance expected in Q4.

   Follow-up. How are R32 tariff discussions shaping up with customers?

   Answer. Pricing is consignment-by-consignment based on prevailing tariff; price range defined for each scenario (25% additional removed/retained/moderated). Trust factor in final pricing. Nothing has changed in 6 months.

9. 9. R32 capacity strategy

   Abhijeet Akella, Kotak Securities

   Question. Can we shift capacity from R134a/R125 to R32 in the future?

   Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. Refused to comment on R32 capacity, saying baseline capacity strategy is a key competitive element to keep confidential.

   Not answered directly.

10. 10. EU carbon tax (CBAM)

    Surya Narayan Patra, Phillip Capital

    Question. EU carbon tax from 1 January — will it affect refrigerant gas or specialty chemical exports?

    Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. No ref gas business in Europe currently, so no impact there. Potential impact on aluminium foil, but European cost of manufacturing is high so the risk is limited. India-EU FTA talks on CBAM will need to be watched. Not significant at present.

    Follow-up. Pharma intermediate business progress, mix, and outlook?

    Answer. Pharma is currently ~10% of specialty chemicals; target is to reach at least 20%. Growing agro but growing pharma faster. New plant driven by molecule/customer traction. Will take time to reach 20%.

11. 11. HFC vs new-gen gas capacity

    Surya Narayan Patra, Phillip Capital

    Question. Is there a need to expand HFC capacity before building new-gen gas capacity?

    Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. Anyone expanding HFC capacity now needs a strong reason — Kigali Amendment does not permit fresh HFC expansion without constraints.

12. 12. R32 demand-supply

    Mahima Rathod, Tiger Assets

    Question. Current demand-supply situation in the fluorochemicals market, specifically for R32?

    Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. Domestic R32 demand is ~17,000–18,000 tonnes, not more. Capacity is substantially higher, so the industry is exporting; over time Indian demand growth will reduce export dependence.

    Follow-up. With new R32 players coming in, what's the risk to prices over 6–12 months?

    Answer. New competition can only enter for CY27; from 2028, quota baseline will be 2024–2026 production. Late entrants get CY27 volume but no quota from 2028. China price discipline is keeping global prices firm; negligible Chinese imports into India in last 3 months. India demand-supply should remain fairly firm short-term.

13. 13. R32 quota regime mechanics

    Madhav Marda, Fidelity Investments

    Question. On R32 quota — players setting up capacity at the fag-end of the quota determination period, how do these play out?

    Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. Baseline of 2024, 2025, 2026 determines quotas going forward. India will abide by Kigali commitments. Quota will go to those producing in those years. Detailed session was given by Prashant Yadav 5–6 months ago; document on Kigali Amendment is public.

    Follow-up. Lead indicators to watch for agro cycle pickup?

    Answer. Revival in crop chemicals demand is the first signal. Normalcy in global trade of crops like soya is the broader catalyst for crop protection normalisation.

14. 14. AI launch pipeline

    Sanjesh Jain, ICICI Securities

    Question. Are we on track for one AI launch in FY26 and a couple in FY27 as guided earlier?

    Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. Yes, on track. One registration has happened; launch expected in the coming year.

    Follow-up. Pharma — innovator direct, KSM, or advanced intermediates? Is the new plant CGMP?

    Answer. Plant will be non-CGMP. Detailed pharma strategy to be shared at the annual call.

    Not answered directly.

15. 15. Specialty Chemicals FY26 growth shortfall

    Sanjesh Jain, ICICI Securities

    Question. At the start of the year, 20% growth was expected in chemicals overall. Will Specialty Chemicals fall short of 20% this year?

    Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. For sure. Agro is going through a tough time across the industry; challenges are beyond control. Margin pressure is largely pricing-led, which drove the EBIT margin decline. Fluorochemicals offset some of this on HFC strength.

    Follow-up. Chemours contract — when do supplies start? Timeline and color?

    Answer. Plants for Chemours will come up in this calendar year. A lot of new equipment learning from European vendors. Chemours sees this as a larger partnership opportunity, not a one-off. PTFE was never part of this transaction — these are higher-end fluoropolymers.

16. 16. HFC volume growth outlook

    Meet Vora, Emkay Global

    Question. HFC capacities fully utilised — how should we look at HFC volume growth over next 2–3 years, only pricing-led till new-gen capacity?

    Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. Under the quota regime, no additional HFC capacity can come in beyond baseline. SRF has already put out whatever it can; the focus is to maximise production within existing capacity for calendar year 2026.

    Follow-up. Is the absence of Chinese imports linked to anti-dumping on R32, and is the review due in December?

    Answer. Anti-dumping on R32 has been in place for 3 years, not new. SRF will go for review but the case will be hard to justify as current Indian pricing is set by global markets and is firm everywhere.

17. 17. Other segments growth moderation

    Vaishnavi Gurung, Craving Alpha Wealth Fund

    Question. Chemicals growing double-digit but other segments moderating — is it Chinese imports/tariffs and when can we expect normalisation?

    Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. Performance Films was hit by excess India capacity and low China pricing in BOPET and BOPP; from December China-driven BOPET price action is being reflected in Indian pricing from January, so revenue growth should improve. Technical Textiles has no capacity addition so it remains range-bound, dependent on raw material pricing.

    Follow-up. Chinese competition on R32 globally?

    Answer. China has multiple R32 producers but each operates under a quota regime limiting how much they can produce and how much capacity they must close. Started last year, continues this year and going forward. Demand-supply for R32 is well balanced.

18. 18. Specialty demand revival timing

    Vaishnavi Gurung, Craving Alpha Wealth Fund

    Question. Last call you said specialty chemicals would see better H2 demand owing to H1 deferment — did that play out in Q3?

    Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. A lot of the expected H2 demand has moved into Q4. Q4 will be significantly better than Q3 with POs in hand, but the underlying sector is still going through a tough time. Recovery will come with portfolio expansion.

    Follow-up. What % of chemicals growth is driven by refrigerant gases?

    Answer. Will share that number at the annual results call, as policy is not to differentiate within chemicals intra-year.

    Not answered directly.

19. 19. Tanfac R32 capacity

    Raghav Chaudhary, Tiger Assets

    Question. Tanfac Industries putting up 20,000 tonnes of R32 (likely Q3 next FY) — how do you see that shaping up given the quota regime?

    Answer, Ashish Bharat Ram, Chairman and Managing Director, SRF Limited. It would be incorrect for SRF to comment on what another company is doing. SRF understands the protocol; if Tanfac's view differs, that's a question to ask them. EC clearance for plant is independent of how Kigali applies.

    Follow-up. What is China's current R32 capacity?

    Answer. R32/R134a/R125 capacity is fungible, so no straightforward answer on China R32 capacity. China has gone one level beyond GWP and gives product-level quotas (R32, R125 etc.) to prevent excess production of any HFC.

Topic by topic, in the order it was spoken

In their words