SRF Q2: Up on Last Year, Down a Third on June
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
- Whether films demand recovers once the June inventory is used up.
- The chemicals segment margin: does it stop falling at about 25%?
- Any split of fluorochemicals and specialty chemicals in the call or presentation.
- Progress and financing on phase I of the battery-foil plant.
Sources
- [R] SRF, unaudited results for the quarter ended 30 September 2026 (NSE)
- [P] SRF, press release on Q2 and H1 FY27 results (NSE)
- [C] SRF, capital expenditure approved by the board (NSE)
- [MS] Moat & Margin, Moat Screener and How MoatSCORE works
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.
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