Buy SRF; target of Rs 655: Emkay

Written By Unknown on Senin, 09 Juni 2014 | 18.01

Brokerage house Emkay Global Financial Services is bullish on SRF and has recommended accumulate rating on the stock with a target price of Rs 655 in its June 06, 2014 research report.

Emkay's research report on SRF

USA imposes anti-dumping duty on R134a Chinese imports in range of 133.5% - 237.3%. This augurs well for SRF in terms of exports potential as well as realizations.

Global packaging films cycle is at trough despite of which SRF's new Thailand BoPET plant is PBT positive while the South African BoPP plant is EBIT positive.

INR appreciation remains the biggest risk, as the growth is mainly driven by exports. Foreign Currency loans does provide hedge, still there will be impact on profits.

We remain bullish on SRF and the recent development adds to our confidence on the achievements of our estimates. We value SRF on blended P/E of 10x on FY16E by assigning P/E of 5x to commodity-driven businesses and 15x high margin, high RoCE Specialty Chemicals business segment. We have not changed our estimates on back of higher growth expected in R134a, albeit it hedges our estimates from INR appreciation. Maintain BUY rating with Upgrade in TP to Rs 655. Valuing the company on blended P/E of 10x on FY16E. At TP, the implied P / BV would be 1.5x & EV/ EBITDA at 5.5x", says Emkay Global Financial Services research.

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