SRF stock drops about 6% as quarterly operating figures disappoint investors

what happened

Shares of SRF Ltd dropped by as much as 6.5% on Wednesday, October 21, as the company's September-quarter report came in below market expectations on operations, according to TradingView. Most line items still grew compared with a year earlier.

Net profit reached 509 crore rupees, up 31.2% year on year but under the 598 crore rupee estimate in a CNBC-TV18 poll. Revenue of 4,904 crore rupees rose 34.7% and beat the poll figure of 4,695 crore. EBITDA climbed 22.1% to 946 crore rupees, yet trailed the poll's 1,055 crore.

The EBITDA margin narrowed by 200 basis points to 19.3% from 21.3%, while the poll had expected it to widen to 22.5%. At the time of the report, the stock was trading 5.3% lower at 2,302.1 rupees and had lost 25% so far this year. The headline also mentions plans for an aluminium foil unit, though the article gives no details on it.

why it matters

The gap between solid revenue growth and weaker EBITDA and margins suggests the company is converting sales into operating profit less efficiently, which is the metric investors focus on most. With the shares already down 25% this year, the miss adds pressure on the stock.

market impact

SRF Ltd: weaker margins and an EBITDA miss weigh on the shares and sentiment around the company

tags

instruments