SRF Q2 FY27 earnings call

What moved the numbers, as management explained it

• Chemicals revenue rose 25% to ₹2,079 crore as HFC volumes increased, specialty volumes improved versus Q1 and select agrochemical demand recovered.
• HFC realization improved and refrigerant prices stayed firm, supporting fluorocarbons revenue while management still expected broadly stable future pricing.
• PTFE mix improved through fine-cut grades and commercial micropowder sales, while capacitor-grade film also scaled ahead of plan.
• Petrochemical and other input inflation, plus freight increases of 15-20% or more on some routes, pressured margins; pass-through and cost optimization offset much, but not all.
• Q1 films had elevated stocking and inventory-related benefits that moderated in Q2; Q1 technical-textile anomalies were largely absent in Q2. (one-off)
• Performance Films & Foils revenue rose 51% to ₹2,122 crore as demand remained robust, asset utilization stayed strong and value-added products grew.

The numbers management led with

• Q2 FY27 consolidated revenue: Rs 4,904 crores (+35% YoY)
• Q2 FY27 PAT: Rs 509 crores (+31% YoY)
• H1 FY27 PAT: Rs 1,268 crores (+55% YoY)
• New aluminium foil battery capex (Jaitapur): Rs 600 crores total; Phase 1 Rs 300 crores; 12,000 MTPA capacity; 23 months for Phase 1

Guidance on this call

What changed since the Thu 23 Jul 2026 call

By business

Balance sheet, capex and funding

• The board approved approximately ₹600 crore for a new aluminium foil facility at Jaitapur, Madhya Pradesh.
• Phase 1 is estimated at ₹300 crore and is expected to be completed within about 23 months of board approval; the project will be executed in two phases.
• The two-phase universal mill is designed for about 12,000 metric tons per annum of battery and high-end packaging foil; no actual capex spend was stated.

The industry, as management sees it

Management sees significant opportunities from global innovators diversifying supply chains away from Europe, with both China and India expected to benefit, but Indian manufacturers like SRF positioned to capture share given diversified/resilient supplier preference. Government ACC PLI scheme expected to accelerate battery supply chain localization in India. Long-term refrigerant demand expected to remain firm on HFC baseline optimization through end-2026 and HFO transition thereafter.

Risks management named

• Geopolitical developments and supply chain disruptions weighing on quarter
• Higher raw material prices impacting both specialty and ref gas margins
• Elevated freight costs (15-20%+ depending on route) not fully passed through
• Specialty chemicals excess capacity environment limiting pricing pass-through
• HFC baseline period (end-Dec 2026) creates demand uncertainty for 2027
• US HFC market buying differently — softer volumes though offset by mix

Not answered directly

• HFC end-of-baseline period capacity number
• Revenue potential of new aluminium foil project (specific number)
• Margin guidance on aluminium foil/battery segment
• Breakdown of billion-dollar sunrise sector opportunity

Asked for a number, answered without one

• HFC capacity at baseline-period end: Management declined to give a number, saying expansion was progressing well and the required capacity levels would be reached in time.
• Battery-foil project revenue and margin: Management declined to guide revenue or margins, pointing instead to foil pricing at 1-1.5 times or more than plain foil and the existing foil business's exit margin.
• HFO pricing after patent expiry: Management expected a decline and a significant premium to HFC pricing, but said a specific range was premature with two years to go.
• H1 chemicals growth bridge: Management said it did not split growth at that level, citing firm refrigerants pricing, good volumes and continued specialty volume recovery.
• Semiconductor-chemical commercialization timeline: Management said much work remained at lab sampling and product optimization; customer sampling, qualification and a revenue timeline were still ahead.
• Films margin normalization: Management called the quarter broadly normalized but said margin translation remained premature amid geopolitical and input-cost uncertainty.
• Pharma pipeline revenue: Management said meaningful volume from one oncology-linked engagement could begin quickly, but a revenue outlook and ramp path were premature.
• Sunrise-sector opportunity breakdown: Management declined a split, saying projects were at different development stages and numbers would follow as commercialization and qualification advanced.
• Incremental sunrise-sector capex: Management declined a number, saying further investment would depend on offtake, qualifications and confidence in higher-grade demand.

Every question, with its answer

1. 1. H2 chemicals outlook; AI 67 registration update

   Rohit Nagaraj, 361 Capital Market Private Limited21:41

   Question. You mentioned in opening remarks that second half is best for us and growth will be more in second half. Is this backed by certain firm commitments, particularly in the chemicals business? And can you give the latest update on the AI 67 we have been working on?

   Answer, Sameer Kashyap, President and CFO. We remain firm that we should be able to land at the higher end of the 15-20% range for chemicals. H2 specifically, we do see a good ramp on specialty from where we are. Even in the last quarter, we talked about volume recovery starting. On the AI 67 (registration), progress has happened on at least two products since last quarter. Registrations progressed in markets like Brazil and a couple of other initial markets. There seems to be momentum from this long pause. There's a lag between registration and full-blown demand, but in the interim, intermediate products will be needed from us.

   Follow-up. What would be our marketing strategy for HFOs once we commercialize at the end of FY28? Domestic or export market? Do we have firm commitments from certain geographies or customers?

   Answer. HFO, at least in the initial couple of years, is clearly going to be largely Western world oriented. That's a certainty. We've operated in those markets for years, entrenched with distribution systems and customer base. There will be some incremental marketing efforts but we are well established in those markets. Should not be a significant transition or investment to address that opportunity area as HFOs come on stream.

2. 2. HFC capacity expansion

   Arjun Khanna, Kotak Mahindra Asset Management Company25:09

   Question. On the HFC side, what capacity do we envisage by the end of this baseline period (end of this quarter)?

   Answer, Sameer Kashyap, President and CFO. We shared in the last call where we desire to land on capacity. The incremental portion has to happen out of the H is progressing effectively. For fairly obvious reasons, as we lead up into the last two months of the baseline period, I'd rather not be very specific about a number. Suffice to say we are progressing well in terms of the numbers we called out.

   Follow-up. Has the repurposing of facilities and brownfield expansion been done or expected to be done by end of this quarter? On the Chemours projects, was there a quarter delay — would we expect FY28 Q1 commercialization? Over what period should we see scale up?

   Answer. On the H repurposing, progressing well, will be at levels needed in time. On Chemours: first plant up on first product in Q4 of this fiscal, second plant in Q1 of following fiscal — those timelines hold. Full scale ramp up is probably 10-12 month window, so following year after (FY29) is when full stream revenue associated with Chemours project should be seen.

   Not answered directly.

3. 3. Aluminium foil capex; technology and qualification; profitability

   Arjun Khanna, Kotak Mahindra Asset Management Company28:01

   Question. On the new capex (aluminium foil for battery) — how is the technology different from current aluminium foil project? How long would qualifications take? Would our aluminium foil business possibly by end of year be profitable by itself?

   Answer, Sameer Kashyap, President and CFO. We've progressed on aseptic packaging with one of the leading aseptic players — that benchmarking gives confidence to go further up the chain into battery foil. Different plant in terms of rolling mill, but will be a universal mill that can address packaging and aseptic needs. Timelines for battery qualification realistically ~2 years from when we're ready. In the interim, can use universal mill for aseptic and other higher grades. Aluminium foil business — yes, it's fair to say it would be profitable by itself by exit.

4. 4. Specialty chemicals customer engagement; registrations

   Kumar Somya, Ambedkar Capital Private Limited31:33

   Question. On specialty chemicals, how are customer engagements and conversations shaping up given inflationary crop prices? How are they talking about registration timelines?

   Answer, Sameer Kashyap, President and CFO. Progress on at least two products has happened since last quarter. Registrations have progressed in markets like Brazil and a couple of other initial markets. There seems to be momentum from this long pause. Lag between registration and full demand, but in the interim, intermediate products will be needed from us as the core AI product scales up over time.

   Follow-up. On the new aluminium foil project (12,000 ton capacity) — what is the revenue potential? And margins — is 15-25% achievable? On HFO pricing currently $50-60, how do you expect pricing to land when patents go?

   Answer. On revenue: don't want to put specific number, but if you think about price points at which aluminium foil typically sells, factor ~1-1.5x or more. As a markup, plain foil is baseline, aseptic is 30-40% markup, battery foil goes significantly north of that. On margins: we don't guide. On HFO: there will be a decline when products come on stream, but baseline resets — HFO prices will be at a significant premium vs HFC. Specific range is premature but fair to expect a drop off post-patent expiry, with price points significantly north of typical HFC pricing.

   Not answered directly.

5. 5. H1 chemicals growth breakdown; currency impact

   Arun Prasad, Avendis Park Private Limited36:10

   Question. On H1 chemicals growth of ~25% YoY, can you qualify growth into volume, pricing, and rupee depreciation? If rupee appreciated back to 3.5%, should we see reversal in H1 delivery?

   Answer, Sameer Kashyap, President and CFO. We don't split at that level. Prices have stayed firm on refrigerant side. Volumes have looked good on refrigerant. Volumes on specialty continue to hold vs Q1. We were seeing green shoots in Q1, those continue to look better. Feel reasonably confident we'll see significant growth in specialty revenues driven by better volumes between H1 and H2. On currency: Q2 volumes holding strong is a good sign that pricing is holding irrespective of currency movement. Don't see softness in price due to competition/imports. Ref cap through the year, we continue to hold view of firm, strong growth, pricing holding.

   Follow-up. On semiconductor chemicals — are the samples at pilot plant or commercial plant? What are next steps before recording significant revenue?

   Answer. These are in the commercial plant, but a lot of the sampling right now is at lab level, external to SRF. Once optimization is done, we'll start seeing more commentary around downstream side, customer sampling and qualification. A little away from that just yet. Pre-work is happening so that we can trigger those pieces once product optimization is done.

6. 6. Pricing environment; RM pass-through; films/tech textile margins

   Ankur Pariwal, Axis Capital Limited45:34

   Question. On overall pricing environment — is it stable across spec chem and overall chemicals portfolio, given decline in chemicals margin on QoQ? What is the timeframe for full RM pass-through? On packaging films and technical textile margin profile — Q2 is a clean quarter post Q1 inventory gains — how do you see that sustaining?

   Answer, Sameer Kashyap, President and CFO. We are seeing pressure on raw material pricing. We've been able to offset large parts through pass-through or cost optimization, but there is RM pressure. Everything downstream and petro plus chemicals is impacted. Secured longer-term contracts with more fixed pricing on some inputs, less exposed to vagaries of price shifts. But there has been some impact on RM and freight. On technical textile — fair to say no Q1 anomalies; mostly normalized. Revenue looking significantly more positive. Should expect in H2. As pricing gets better, may get passed through. On ref gas side, ability to pass through is looking better. On specialty, ability to pass through isn't as much; offset by operational efficiency. We remain optimistic but how much passes through into margins given geopolitical/input cost uncertainty is still a question mark.

   Follow-up. On HFC volumes expanding — is that mid/long-term or near-term? What is the capacity utilization for the HFC portfolio? Can you give breakdown of the billion-dollar opportunity across segments mentioned in presentation?

   Answer. At least till December this year, plan is to run absolutely flat out. Very maximized at this point. Will optimize quota — short-term decision-making. Plants are maxed out and optimized, will continue that way through next year. On billion-dollar opportunity: it's at different stages of germination. Capacitor is way ahead of curve, at significant premium to vanilla film. Foil: phase 1 will be about half total capacity, expect all capacity consumed quickly given storage/EV growth. Others still at lab testing/drawing board stage. Will give more visibility as projects commercialize. There are at least a couple of other spaces not on slide that still add to billion-dollar opportunity. Splitting down at this point is premature.

   Not answered directly.

7. 7. Sunrise sector capex allocation; timeline

   Surya Narayan Patra, Philip Capital India Private Limited58:08

   Question. On sunrise sectors, you have packaged existing manufacturing capacities for new age industry applications. What is the capital allocation going ahead? Any color on timeline, even for FY29/FY30?

   Answer, Sameer Kashyap, President and CFO. Timelines around how each of these scale and develop will be variable. Capacitor is already up there; sooner than later we'll plan a second line (approval already in place). On foil, we have board approval for the full ~₹600 cr aspiration, going in phases. On PVDF, it's a journey from entry-level applications to battery binder space (highest end grade). Would need more investments between now and getting to that grade. Timeline will be a function of offtake in grades. Will continue to share more color as we go through quarters.

   Follow-up. On HFO project — in the timeframe before commissioning, what are immediate opportunities being targeted? Is it contract manufacturing? What challenges post-commissioning? Timeline for ramping up?

   Answer. For new plants, realistically 8-12 months to stabilize and run effectively. May have some volumes before but not meaningful. So if HFO ready by Feb 2028, plan 10-12 months from there for reasonably larger volumes. On challenges: on ref gas, need to plan cost structures and ability to compete at China-level. We've developed our own non-infringing technology that we believe will be market-beating on cost competitiveness. We are trusted partner with Western world customers, which gives confidence on access to right markets. All signs augur well.

8. 8. Fluorochemicals US market; profitability of expansion

   Ranjit, IIFL Capital Services Limited1:03:51

   Question. On fluorochemicals — you said aggressive expansion in newer markets helps offset US softness. Did that come at the cost of profitability, and what's the outlook on US market?

   Answer, Sameer Kashyap, President and CFO. The market push was not at the cost of profitability. We've actually generated better price in some newer markets because of compelling quota needs. There were just newer opportunities in areas we hadn't pushed products into. See ourselves as a global refrigerant player. US market is buying very differently vs traditional patterns — softer but different product mix. A lot of other players may struggle to fulfill US demand. Any softness in US is capacity we can redirect to other markets. Augurs well for footprint future.

   Follow-up. On pharma pipeline, you mentioned encouraging traction in select molecules with key Western world customers — can you shed more light and potential revenues? On freight cost as drag in margins — what percentage figure is fair to assume?

   Answer. On pharma: with two specific customers (very meaningful names in pharma space). With one, we should start seeing meaningful volume and revenue kick through very quickly — in larger oncological space. Second one, lot left to share at this point. Both engagements looking very promising; hope to give more constructive view on revenue outlook and ramp path in near term. On freight: depends on where product going, choose 15-20%, in some cases higher. Some impact from Middle East issues and longer routes. Pretty wide range. Anyone exporting out of India is witnessing this. Not unique to SRF.

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