SRF Q3 Profit Surges 60% Despite Labour Code Headwinds; Shares Dip

CHEMICALS

Overview

SRF Ltd reported a robust 60% year-on-year net profit increase to ₹432.7 crore for the December quarter, surpassing analyst expectations. Revenue climbed 6.3% to ₹3,712.5 crore. Despite a ₹73.24 crore impact from new labour codes and headwinds in its specialty chemicals segment, the company declared a 50% interim dividend. Shares reacted negatively, falling nearly 4% on the NSE.

Earnings Beat Despite Headwinds

SRF Ltd announced its December quarter financial results, revealing a significant 59.7% year-on-year surge in net profit to ₹432.7 crore. This performance exceeded market expectations, with revenue also seeing a modest 6.3% rise to ₹3,712.5 crore. The company's EBITDA grew by a healthy 26% to ₹780 crore, maintaining a strong margin of 21%.

Labour Code Impact and Segment Performance

The positive results were achieved despite a reported ₹73.24 crore impact from the implementation of new labour codes, which pressured profitability. The specialty chemicals division experienced a muted quarter, facing challenges from aggressive pricing by Chinese competitors and deferred offtake from key customers. This indicates underlying softness in demand despite overall volume growth.

Dividend and CFO Appointment

In a move to reward shareholders, SRF's board declared an interim dividend of 50%, equivalent to ₹5 per share. This dividend is slated for payment by February 17, 2026, for shareholders of record on January 27, 2026. The company also announced the appointment of Samir Kashyap as President and Chief Financial Officer, following committee approvals.

Market Reaction

Despite the strong earnings beat, shares of SRF Ltd experienced a decline, falling nearly 4% on the National Stock Exchange. Investors appeared to weigh the impact of the labour code expenses and the subdued performance in the specialty chemicals segment against the profit growth and dividend announcement.

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