Target: ₹3,245

CMP: ₹2,453.35

Commentary from SRF’s key customers seems to be suggesting that channel destocking has been easing and patented agrochemicals demand will see an uptick in H2-FY23.

While volume has been under pressure, Bayer said in its recent concall that it expects insecticides and fungicides products to recover compared with the last year; these products were affected last year due to drought conditions in EMEA and LATAM and lower planted acres and licensing revenue in soybean and cotton in the US.

In our view, this scenario is positive for SRF’s fluorospecialty business. Besides, commentaries from HVAC equipment producers indicate short supply for HFC blends.

Our checks indicate that over the last couple of weeks SRF has started seeing good demand traction for HFC blends. In our last sector update, we had highlighted that refrigerant price normalisation offers a good entry point.

We reiterate our BUY stance on the name as we have started seeing signs of normalisation on the ref gas side even as we await green-shoots on the agro-chem side. SRF remains one of our top picks with a September 2024 target price of ₹3,245.