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# SRF Q2: Up on Last Year, Down a Third on June
- URL: https://www.moatmarginresearch.com/srf-q2-margin-quarter-on-quarter/
- Published: 2026-10-22T01:05:00.000Z
- Updated: 2026-10-22T01:05:00.000Z
- Description: SRF's Q2 profit rose 31% on last year but fell 33% from the June quarter. Segment margins narrowed in all three main businesses. What the filings show.
- Author: A K Karthikeyan
- Tags: Moat Insights

**SRF's press release leads with growth: revenue up 35% and profit up 31% on last year. Put the September quarter next to June and the picture changes. Profit fell from ₹759 crore to ₹509 crore, down 33% (our arithmetic), and the operating margin narrowed in all three of its main businesses. The same day, the board approved a ₹600 crore plant for aluminium foil used in batteries.**

## Two comparisons, two stories

| Consolidated, ₹ crore   | Q2 FY26 | Q1 FY27 | Q2 FY27 | vs last year | vs June |
| ----------------------- | ------- | ------- | ------- | ------------ | ------- |
| Revenue from operations | 3,640   | 5,033   | 4,904   | +35%         | –3%     |
| Segment results (EBIT)  | 650     | 1,116   | 816     | +26%         | –27%    |
| Profit after tax        | 388     | 759     | 509     | +31%         | –33%    |

Source: \[R\]; percentage changes are our arithmetic. Revenue barely moved from June, but segment profit fell by over a quarter.

## Where the margin went

Segment result as a share of segment revenue (our arithmetic from \[R\]):

| Segment                  | Q2 FY26 | Q1 FY27 | Q2 FY27 |
| ------------------------ | ------- | ------- | ------- |
| Chemicals                | 28.9%   | 27.6%   | 25.4%   |
| Performance Films & Foil | 8.4%    | 17.3%   | 9.7%    |
| Technical Textiles       | 8.9%    | 18.1%   | 12.2%   |

**Chemicals** (refrigerant gases and specialty chemicals) earned less per rupee of sales than both a year ago and in June. Its revenue fell 10% from June, to ₹2,079 crore (our arithmetic). The press release cites "positive pricing momentum across key products" in fluorochemicals, but says specialty chemicals faced "industry overcapacity in China and ongoing geopolitical developments" (\[P\]).

**Films and foil** gave back most of June's jump. The margin went from 17.3% to 9.7%. SRF's explanation: "Q2 demand was moderated by inventory build-up following heightened buying activity amid the volatility witnessed in Q1" (\[P\]). In other words, customers bought ahead in June and bought less in September. "Demand for Aluminium foil, meanwhile, remained healthy during the quarter." (\[P\])

**Technical textiles** (tyre cord and belting fabrics) fell from 18.1% to 12.2%, still above last year's 8.9%.

## The cost line

Materials (raw materials, traded goods and the inventory change) took 53.0% of revenue, against 48.8% in June and 48.6% a year ago (our arithmetic from \[R\]). That four-point jump in one quarter is most of the story: SRF sold about as much as in June, but paid more for what went into it. Foreign-exchange losses were smaller than in June (₹63 crore against ₹102 crore) (\[R\]).

## The ₹600 crore battery-foil plant

SRF Altech, a wholly owned subsidiary, will build a plant for aluminium foil used in lithium-ion and sodium-ion batteries at its existing site at Jetapur, Madhya Pradesh (\[C\], \[P\]):

- **Cost:** about ₹600 crore, in two phases of ₹300 crore each, paid for with "Mix of debt and internal accruals" (\[C\]).
- **Capacity:** about 12,000 tonnes a year in total (\[P\]).
- **Timing:** phase I by September 2028, phase II by September 2030 (\[C\]).
- **Why:** "To build a portfolio of future-ready value-added products such as battery foil for Energy Storage and EV sectors." (\[C\])

The plant adds a battery-grade product to the foil business that the press release says is already seeing healthy demand. Neither filing gives an expected revenue or margin for it.

## Moat and margin

**Focus moat: process know-how and scale in fluorochemicals.** The filings show a chemicals business that still earns a 25% segment margin, the highest of SRF's businesses, in a quarter when the press release itself cites Chinese overcapacity in specialty chemicals. That margin has now narrowed for two quarters running: 28.9% a year ago, 27.6% in June, 25.4% now.

**Margin: down from June in every segment.** Year on year, films and textiles are better and chemicals is worse. Quarter on quarter, all three are worse, and the materials share of revenue rose four points.

**MoatSCORE** (Moat Screener, first pass): SRF 5.20, AMBER+ (\[MS\]).

## The bear case

- **The June quarter flattered.** Films margins doubled on customers buying ahead; September shows what happens when they stop.
- **Chemicals margins are sliding.** Three points lower than a year ago, with Chinese overcapacity named as a factor.
- **Costs rose faster than prices.** Materials took four more points of revenue than in June.
- **More capital going in.** ₹600 crore for a new product line, part of it borrowed, with no disclosed return.

## The case for

- **Year-on-year growth is real:** revenue up 35% and segment profit up 26%.
- **Fluorochemicals pricing is described as positive** and refrigerant volumes as "robust" (\[P\]).
- **Foil demand is holding**, and the new plant extends that business into batteries.

## What to watch

1. Whether films demand recovers once the June inventory is used up.
2. The chemicals segment margin: does it stop falling at about 25%?
3. Any split of fluorochemicals and specialty chemicals in the call or presentation.
4. Progress and financing on phase I of the battery-foil plant.

## Sources

- **\[R\]** [SRF, unaudited results for the quarter ended 30 September 2026](https://nsearchives.nseindia.com/corporate/ekta%5Fmaheshwari%5F21102026145316%5FResultsSep26.pdf) (NSE)
- **\[P\]** [SRF, press release on Q2 and H1 FY27 results](https://nsearchives.nseindia.com/corporate/ekta%5Fmaheshwari%5F21102026151307%5FPressReleaseF.pdf) (NSE)
- **\[C\]** [SRF, capital expenditure approved by the board](https://nsearchives.nseindia.com/corporate/ekta%5Fmaheshwari%5F21102026145942%5FSEIntimationCapexSRFAltech.pdf) (NSE)
- **\[MS\]** [Moat & Margin, Moat Screener](https://www.moatmarginresearch.com/moat-screener/) and [How MoatSCORE works](https://www.moatmarginresearch.com/moatscore/)

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> Educational research, not investment advice. Every figure above is drawn from SRF's own filings, read from the primary documents on 22 October 2026; derived figures are our arithmetic, labelled as such. MoatSCORE read live from the Moat Screener on 22 October 2026\. No buy/sell recommendations, no price targets, no share prices. Moat & Margin is not a SEBI-registered Research Analyst or Investment Adviser.