/** blogpostTitle: SRF FY26: Strong profitability and a big bet on next-generation refrigerants */

SRF FY26: Strong profitability and a big bet on next-generation refrigerants

SRF ended FY26 with steady top-line growth and a sharp improvement in profitability, even as management described the operating environment as volatile and uncertain. Consolidated gross operating revenue rose 7.4 percent year on year to INR 15,786.5 crore. EBITDA grew 24.7 percent to INR 3,705.0 crore, lifting the EBITDA margin to 23.5 percent from 20.2 percent a year ago. Profit after tax increased 46.7 percent to INR 1,835.2 crore, with a PAT margin of 11.6 percent.

The company’s results highlight two clear themes. First, Chemicals continues to be the earnings anchor, contributing 75.2 percent of consolidated EBIT in FY26. Second, SRF is using its balance sheet capacity to place targeted bets on higher-value and next-cycle opportunities, especially in refrigerants (HFO transition) and performance films (value-added products), while also showing willingness to defer projects when the environment changes.

FY26 financial performance in context

On a consolidated basis, Q4 FY26 revenue increased 7.0 percent to INR 4,615.2 crore. EBITDA rose 13.5 percent to INR 1,176.8 crore and PAT increased 10.6 percent to INR 582.0 crore. Interest expense declined year on year, and management also discussed that forex movements led to mark-to-market impacts on forward positions during the year.

SRF’s ratio trends presented in the deck show that FY26 margins recovered meaningfully from FY25. Net debt metrics remained conservative, with net debt to equity at 0.27 and net debt to EBITDA at 1.02 in FY26.

Segment performance: Chemicals remains the profit engine

SRF operates through four reporting segments in the presentation: Chemicals, Performance Films and Foil, Technical Textiles, and Others (coated and laminated fabrics).

Chemicals was the largest segment by both revenue and profit. FY26 chemicals revenue grew 16.3 percent to INR 7,779.0 crore and segment EBIT increased 35.9 percent to INR 2,262.9 crore. EBIT margin expanded to 29.1 percent from 24.9 percent in FY25.

Performance Films and Foil (PFB) delivered a modest revenue increase of 3.8 percent to INR 5,764.2 crore, but EBIT rose 39.2 percent to INR 507.5 crore. EBIT margin improved to 8.8 percent from 6.6 percent, reflecting the company’s push on mix and value-added products.

Technical Textiles had a tougher year, with FY26 revenue declining 7.5 percent to INR 1,877.0 crore and EBIT down 20.1 percent to INR 190.1 crore. The company noted that performance improved progressively through the year and that some sub-segments are showing early recovery.

Others reported FY26 revenue of INR 366.4 crore, down 14.3 percent, and EBIT of INR 47.0 crore, down 31.7 percent.

Strategy and execution: investing for the next cycle

The management commentary positioned FY26 as a year of execution in a difficult macro setting. The Chairman described the environment as a VUCA world, citing ongoing geopolitical tensions, logistics challenges, and currency volatility. Within this backdrop, SRF’s strategic actions were centred on technology, capacity positioning, and portfolio mix improvement.

Next-generation refrigerants: Odisha HFO and HF integration

The most significant strategic update was in Fluorochemicals. The Board approved enhancement of investment at the Odisha site to around INR 2,300 crore. This includes a 20,000 MTPA HFO facility, a 30,000 MTPA hydrofluoric acid plant, and value-added HF derivatives. Management said the planned HFO product mix includes HFO-1234yf, HFO-1234ze and HFO-1233zd, and that the technology has been developed in-house and is intended to be non-infringing.

On the call, the CFO shared a commissioning timeline of around February 2028. He also clarified that the HF capacity is primarily intended as feed for the HFO facility, with part expected to support value-added HF derivatives.

In addition, SRF approved a Dahej debottlenecking capex of around INR 88 crore, aligned with its HFC entitlement under the Kigali Amendment, taking HFC capacity beyond 65,000 MTPA. Management avoided giving a precise post-debottleneck capacity number but indicated it would be north of 65,000 MTPA.

Specialty chemicals: defending share, building the pipeline

Specialty Chemicals commentary was more cautious. Management cited aggressive participation from Chinese players leading to pricing pressure across SRF’s markets and customer end markets. The company’s stated approach is to defend market share rationally, lean into cost reductions through technology-led interventions, and keep strengthening the pipeline across agro and pharma.

In the Chairman’s remarks, SRF reiterated its intent to increase the share of pharma faster than agro over time. The company referenced pharma intermediates plant number 2 as part of this strategy, and management highlighted a pipeline that spans key starting materials and regulatory starting materials. The pace of commercialization, however, was described as dependent on customer launch timelines and registration progress.

Films: value-added products and capex reprioritization

Performance Films and Foil saw improving profitability in Q4 and FY26. The company attributed the Q4 recovery to better volumes and margins in BOPET and BOPP, continued strong performance in South Africa, and an improved product mix in aluminium foil with higher exports.

Two strategic moves stood out. First, management said the capacitor-grade BOPP film line conducted trial runs, marking entry into higher-value technical films. Second, the Board deferred the proposed BOPP film facility at Indore (around INR 490 crore) indefinitely due to changes in the operating environment.

Instead, SRF will invest around INR 180 crore in a BOPA (polyamide) line, which management said would be operational by September 2027 and positioned as an import substitution opportunity.

CWIP and commissioning cadence

On the balance sheet, an investor asked about around INR 2,000 crore of CWIP and timing of capitalization. Management indicated multiple projects would be capitalized through the current financial year, including the capacitor plant early in the year, the BOPP and BOPE line closer to the second quarter, and fluoropolymer projects towards Q3 or early Q4.

Guidance and what management is watching

SRF offered explicit forward-looking statements on the call. The Chairman stated that the company expects Chemicals business growth in the range of 15 percent to 20 percent in the coming year. Management also stated planned capex for FY27 at approximately INR 2,500 crore.

The Q and A provided additional signposts:

• Raw material and logistics disruptions did not lead to shutdowns in Q4, and management expects no meaningful impact in the current quarter, particularly for Performance Films and Foil where alternate supply chains were arranged.
• Middle East shipping disruptions impacted the ability to ship into that region for part of Q4, but management said volumes were repositioned into other markets and did not describe it as lost business.
• On refrigerant regulation and quotas, management repeatedly emphasized uncertainty around the Government of India’s approach to HCFC inclusion and quota allocation. They explained the concept of calendar year 2027 as a “free year”, indicating that quota constraints begin from January 1, 2028.

Takeaways

FY26 shows SRF’s ability to expand margins even in a stressed global environment, driven primarily by Chemicals and aided by a recovery in Films profitability. The company is also making clear strategic choices: invest aggressively where the next cycle is forming (HFO transition and specialty fluoropolymers), and pause projects where industry economics have shifted (deferring the Indore BOPP line).

The key variables to track from here are execution timelines on large capex projects, the pace of recovery in specialty chemical pricing amid Chinese competition, and regulatory clarity in the refrigerant quota regime. Management’s guidance of 15 percent to 20 percent growth in Chemicals and planned FY27 capex of about INR 2,500 crore set the near-term direction, but the delivery will depend on how quickly new products and capacity ramps translate into stable volume and mix gains.