SRF Ltd shares dropped to a 52-week low of ₹2,178.30 after the company reported a 330-basis-point contraction in operating margins. Despite a 31% rise in net profit to ₹509.12 crore and a 35% revenue increase, the market focused on pricing pressures in the chemicals segment and weak performance in packaging films. The stock has corrected 27% year-to-date as investors weigh the company's profitability against global supply gluts.
Margin Decline and Profitability Challenges
SRF Ltd shares fell to a 52-week low of ₹2,178.30 on Thursday, reflecting investor concern following the company’s second-quarter earnings report. While the firm reported a 31% year-on-year increase in consolidated net profit to ₹509.12 crore and revenue growth of 35% to ₹4,904 crore, these gains were overshadowed by a 330-basis-point contraction in operating profit margins (EBITDA), which fell to 20.6%. Investors largely reacted to the fact that profitability failed to keep pace with the company's revenue expansion.
Segment Performance and Pricing Pressure
The profitability decline is largely tied to aggressive pricing pressure, particularly in the chemicals segment. Even though this division saw revenue grow by 25%, its operating profit dropped 10% year-on-year. This issue is linked to a global supply glut, with competition from Chinese manufacturers keeping prices low and putting significant pressure on the margins of domestic firms. The packaging films business also struggled, with margins shrinking by 762 basis points quarter-on-quarter to 9.7%, following a period where the business had benefited from inventory tailwinds that did not repeat this quarter. Subdued replenishment demand in the market further impacted the segment's results, while the technical textiles division also failed to meet analyst projections.
Future Capital Spending and Investor Outlook
To address long-term growth, the company announced a ₹600 crore investment to build a battery-grade aluminium foil manufacturing plant in Madhya Pradesh. This is a capital-intensive project with a phased commissioning schedule between 2028 and 2030. While this initiative aims to diversify the company's portfolio, it is a multi-year project and does not address the immediate profitability issues caused by the current pricing environment. The stock has now fallen roughly 27% since the start of 2026, and the share price lost about 14% of its value in just the last five trading days. Moving forward, the most important update for investors will be whether the company can regain pricing power in its chemicals and packaging businesses, or if margins will continue to face downward pressure due to sector-wide supply challenges.