SRF Q1 FY27: Best-ever quarter, but management flags normalization ahead

SRF opened FY27 with its strongest quarterly performance on record, even as management repeatedly stressed that the global operating environment remains volatile. For the quarter ended June 30, 2026, consolidated gross operating revenue rose to INR 5,033.3 crore, up 31.8 percent year-on-year. Operating profitability expanded faster than revenue, with EBITDA increasing to INR 1,372.6 crore, up 61.4 percent, and EBITDA margin improving to 27.3 percent from 22.3 percent a year ago.

Profit after tax grew 75.5 percent to INR 758.9 crore, taking PAT margin to 15.1 percent. Alongside the results, the Board approved an interim dividend of INR 5 per equity share, signalling confidence after a strong start.

The quarter’s shape was driven by two large engines: a steady Chemicals business and an unusually strong Performance Films and Foil business. Technical Textiles also delivered a sharp improvement year-on-year, while the smaller Other businesses remained stable.

Revenue mix: Films gained share, Chemicals remained the anchor

SRF’s consolidated revenue mix shifted modestly toward Performance Films and Foil in Q1 FY27, reflecting a sharp jump in that segment’s sales and profitability.

Chemicals remained the largest segment by revenue at INR 2,314.9 crore, contributing 46.0 percent of consolidated revenue. Performance Films and Foil followed at INR 2,016.7 crore and a 40.1 percent share. Technical Textiles contributed INR 596.8 crore, while Other businesses contributed INR 104.9 crore.

This mix matters because the drivers were not uniform. Chemicals benefited from healthy fluorochemicals performance and early signs of stabilisation in Specialty Chemicals, while Performance Films and Foil was boosted by supply disruptions and opportunistic demand.

Chemicals: steady margins, green shoots but not broad-based

Chemicals delivered revenue of INR 2,314.9 crore, up 25.9 percent, with EBIT of INR 638.4 crore. EBIT margins remained stable at about 27.6 percent, indicating that the business held profitability even as parts of the portfolio continued to face pricing pressure.

In Specialty Chemicals, management highlighted that technology-led cost initiatives helped sustain market share in key products and that customer participation has broadened the opportunity funnel for both agro and pharma applications. At the same time, the company acknowledged persistent pricing pressure across both SRF and customers’ end markets due to competition from Chinese players.

The outlook commentary was cautious but slightly more constructive than recent quarters. Management said early signs of recovery are emerging in agrochemical demand, but also noted that broad-based demand is yet to pick up. It added that the product portfolio is set to expand further, with new launches planned for the coming quarters, supported by continued cost reduction through operational excellence and technology-driven initiatives.

In Fluorochemicals, management described a robust quarter driven by higher volumes across domestic and exports markets, along with steady performance from industrial chemicals and fluoropolymers. Raw material cost increases from supply chain disruptions were said to be offset by higher realizations. SRF also emphasized high utilization of HFC capacities and continued progress on PTFE ramp-up, including the addition of value-added grades.

A key strategic thread is the Odisha capex. Management stated that newly approved capex in Odisha is progressing as per plan, with site regulatory approvals being applied for as per schedule. It framed the Odisha investments in next-generation refrigerants, backward integration and specialty fluoropolymers as central to its ambition of building a globally significant fluorochemicals business. It also stated that post commissioning of new HFO plants in Odisha, SRF expects to be in the top 3 to 4 refrigerant gas manufacturers globally.

Separately, SRF’s Chemicals Technology Group was highlighted as a core capability driver, with two R&D centres in India (Bhiwadi and Gurugram) and three new process patents granted in Q1 FY27. The presentation also cited 159 global patents granted and 528 patents applied.

Performance Films and Foil: exceptional Q1, value-added strategy gathers pace

Performance Films and Foil delivered its highest ever quarterly performance, with revenue increasing 42.2 percent to INR 2,016.7 crore and EBIT rising to INR 349.7 crore. EBIT margin expanded to 17.3 percent from 9.9 percent a year ago.

Management attributed a meaningful portion of the Q1 outperformance to supply disruptions linked to geopolitical factors, which supported margins across regions. It also said the business benefited from operating at full capacity when other players faced disruptions, supported by robust supply chains and global sourcing. It noted that some customers also engaged in panic buying.

Despite the quarter’s unusual tailwinds, SRF continues to push structural initiatives designed to improve the mix and reduce cyclicality. The company said the capacitor grade BOPP film project was capitalised in Q1 FY27 following successful trials. Under its KAPLAR brand of capacitor grade BOPP films, SRF is targeting a specialised high-value segment. Customer qualification is progressing, with approvals already secured from some key customers and commercial volumes expected to ramp up as more approvals are received. Management also indicated pricing for capacitor films is materially better than vanilla packaging films and expected to be margin accretive.

The Board also approved a capex proposal to set up a BOPET thick film line in India at a projected cost of INR 250 crore, with capacity of 25,000 metric tons per annum. Management stated a 24-month commissioning timeframe and positioned the project as a move into a substrate with limited domestic capacity and lower volatility versus thin films, targeting high-end electrical and electronics applications.

In aluminium foil, the business continued to gain traction in export markets and is progressing on customer approvals in higher-value applications, including aseptic packaging. Management indicated that commissioning of new metallizers in Thailand and South Africa and an offline coating machine in India is expected to provide some cushion.

Importantly, management guided that Q1 was exceptional and expects performance to stabilise to more normal levels in Q2. However, it also stated that it expects the baseline performance to be recalibrated at a higher level going forward.

Technical Textiles and Others: recovery helped margins, normalization expected

Technical Textiles posted revenue of INR 596.8 crore, up 27.9 percent, and EBIT of INR 107.8 crore, up 186.4 percent. EBIT margin expanded to 18.1 percent.

Management said demand recovery and inventory gains supported performance, but it expects margins to normalise as demand-supply conditions return to a more balanced level. Belting Fabrics benefited from improved domestic demand and robust exports to the US. Polyester Industrial Yarn performed well, aided by improved share in geotextile and seatbelt segments, supported by the QCO stay order from May 2026, though management flagged that some benefits may normalise over time. It also highlighted operational de-risking through conversion from LPG to PNG.

Other businesses, comprising Coated Fabrics and Laminated Fabrics, delivered revenue of INR 104.9 crore and EBIT of INR 20.2 crore. Coated Fabrics maintained leadership in the domestic market, while Laminated Fabrics remained stable and added two new looms in June 2026 to augment inhouse textile manufacturing capacity.

What management is guiding for the rest of FY27

Management repeatedly highlighted seasonality in SRF’s Chemicals business. It expects Q2 to be sequentially lower than Q1, while remaining year-on-year stronger. It also expects H2 to be stronger than H1 for chemicals, implying a more backloaded recovery for parts of Specialty Chemicals.

On Chemicals growth, management stated that its broad guidance for FY27 remains 15 percent to 20 percent growth, and it reiterated that it continues to hold that range after the Q1 performance.

For Performance Films and Foil, management expects normalization in Q2 after a quarter aided by supply constraints and higher prices linked to geopolitical uncertainties. At the same time, it indicated that the baseline has structurally improved, citing better overseas operations and a deliberate shift towards value-added products.

Takeaways

SRF’s Q1 FY27 numbers reflect a quarter where execution met a favourable backdrop in several areas. Chemicals delivered growth with stable margins, while Performance Films and Foil benefited from supply dislocations and strong operating rates, producing a sharp profitability uplift.

The more durable story lies in the pipeline. Across films and fluorochemicals, SRF is investing in value-added products and capacity additions with explicit commissioning timelines in some cases. Management’s guidance remains anchored around seasonality and normalization, but the quarter strengthens the company’s starting position for FY27 and provides room for investments in Odisha fluorochemicals expansion, specialty fluoropolymers and differentiated film products.