SRF (SRF)
CyclicalFairStock Score: 59/100 — STEADY
Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1
Key Financials
| Current Price | ₹2,606 |
| Market Cap | ₹77,243.41 Cr |
| P/E Ratio | 35.71 |
| ROCE | 12.27% |
| ROE | 14.09% |
| Dividend Yield | 0.38% |
| Profit Growth | 42.64% |
| Debt/Equity | 0.36 |
| Sales Growth | 24.91% |
| Free Cash Flow | ₹1,005 Cr |
| Promoter Holding | 50.26% |
| 52-Week Range | ₹2,355 — ₹3,210 |
| Sector | Chemicals & Petrochemicals |
| Book Value | ₹473.74 |
Strengths
- Low leverage: Debt/Equity of 0.35 with ₹1,005 Cr free cash flow and Altman Z-Score of 3.92.
- Strong financial health reflected by Piotroski F-Score of 8/9.
- Promoter holding of 50.26% aligns management with long-term minority shareholders.
- Steady revenue growth: 5-year CAGR of 11.83% and latest quarterly sales growth of 11.01%.
Concerns
- Very expensive valuation: P/E of 41.07, P/B of 5.97, and EV/EBITDA of 123.10.
- Price is far above both Graham Number of ₹758.56 and DCF intrinsic value of ₹1,815.37, leaving negative margin of safety.
- Commodity chemicals are cyclical; the 55.13% profit growth may not be sustainable.
- Dividend yield of only 0.35% offers minimal downside support.
AI Analysis
At ₹2,542.40, SRF is a ₹75,950 crore enterprise being sold to me at a price that seems to assume perfection. The fundamental scorecard is respectable: debt-to-equity is only 0.35, free cash flow is ₹1,005 crore, the Piotroski F-Score is 8/9, and the Altman Z-Score of 3.92 suggests no imminent financial distress. Promoter holding of 50.26% also keeps ownership aligned with minority holders. But as Graham taught, a wonderful business can still be a poor investment at the wrong price. Here, the P/E is 41.07, P/B is 5.97, and EV/EBITDA is an eye-watering 123.10. Sales growth is steady at 11.01%, and the 5-year revenue CAGR of 11.83% is decent, yet the 55.13% profit growth smells more like a cyclical tailwind than a permanent feature of a commodity chemical business. The Graham Number is ₹758.56 and the DCF intrinsic value is ₹1,815.37; against the current price, I have a negative margin of safety of about 238%. That is not investing; that is speculating. ROE of 14.09% and ROCE of 12.27% are fine but not exceptional for a business with limited pricing power. A dividend yield of 0.35% gives me almost no income while I wait. This feels like a case where Mr. Market is enthusiastic and I must remain disciplined. I will not chase this price. I will keep SRF on my watchlist and wait for a margin of safety to appear.
Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer