SRF Ltd. is Rated Hold by MarketsMOJO

Understanding the Current Rating

The 'Hold' rating assigned to SRF Ltd. indicates a balanced outlook for investors. It suggests that while the stock is not currently a strong buy, it remains a viable option for those seeking moderate exposure to the specialty chemicals sector. This rating is derived from a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals.

Quality Assessment

As of 29 December 2025, SRF Ltd. demonstrates a strong quality profile. The company boasts a high Return on Capital Employed (ROCE) of 17.09%, reflecting efficient management and effective utilisation of capital. This figure is a testament to the firm's operational excellence and its ability to generate robust returns on investments. Additionally, the company maintains a low Debt to EBITDA ratio of 1.28 times, underscoring its prudent debt management and strong capacity to service liabilities. These factors contribute to a 'good' quality grade, signalling financial stability and operational strength.

Valuation Considerations

Despite its quality credentials, SRF Ltd. is currently classified as 'very expensive' in terms of valuation. The stock trades at an Enterprise Value to Capital Employed ratio of 5.6, which is elevated relative to typical benchmarks. However, it is noteworthy that the stock is priced at a discount compared to its peers' historical averages, offering some valuation comfort. The company's Price/Earnings to Growth (PEG) ratio stands at 1.3, indicating that while the stock is richly valued, its earnings growth prospects justify a premium to some extent. Investors should weigh this valuation premium against the company's growth trajectory and sector positioning.

Financial Trend and Profitability

The financial trend for SRF Ltd. remains positive as of 29 December 2025. The company has reported positive results for the last three consecutive quarters, with a notable 53.74% growth in Profit After Tax (PAT) over the first nine months, amounting to ₹1,346.56 crores. Operating profit to interest coverage ratio is exceptionally strong at 10.95 times, highlighting the firm's ability to comfortably meet interest obligations. These metrics reflect a healthy earnings momentum and underline the company’s capacity to sustain profitability amidst market fluctuations.

Technical Outlook

From a technical perspective, SRF Ltd. exhibits a mildly bullish stance. The stock has delivered a year-to-date return of 39.02% and a one-year return of 37.53%, significantly outperforming the broader market benchmark, BSE500, which returned 5.69% over the same period. This market-beating performance is supported by strong institutional holdings at 37.55%, indicating confidence from sophisticated investors who typically conduct rigorous fundamental analysis. The stock’s technical grade suggests moderate upward momentum, making it attractive for investors who consider chart patterns and price trends in their decision-making.

Sector Position and Market Capitalisation

SRF Ltd. holds a prominent position within the specialty chemicals sector. With a market capitalisation of approximately ₹91,781 crores, it is the second-largest company in the sector, trailing only Adani Enterprises. The company accounts for 19.93% of the sector’s market capitalisation and contributes 9.74% to the industry’s annual sales, which total ₹15,263.46 crores. This significant market presence reinforces SRF Ltd.’s role as a key player and a bellwether for sector performance.

Implications for Investors

For investors, the 'Hold' rating on SRF Ltd. suggests a cautious but optimistic stance. The company’s strong quality metrics and positive financial trends provide a solid foundation for steady performance. However, the elevated valuation signals that the stock may not offer significant upside in the near term without further earnings acceleration or sector tailwinds. The mildly bullish technical outlook supports the potential for moderate gains, but investors should remain mindful of market volatility and sector-specific risks.

In summary, SRF Ltd. represents a well-managed, financially sound company with robust earnings growth and a commanding sector presence. Its current valuation reflects optimism about future prospects, balanced by the need for prudent investment consideration. The 'Hold' rating is appropriate for investors seeking exposure to specialty chemicals with a moderate risk appetite and a focus on capital preservation alongside growth potential.

Summary of Key Metrics as of 29 December 2025:

• Mojo Score: 64.0 (Hold)


• ROCE: 17.09%


• Debt to EBITDA: 1.28 times


• PAT (9M): ₹1,346.56 crores, up 53.74%


• Operating Profit to Interest Coverage: 10.95 times


• Enterprise Value to Capital Employed: 5.6 (Very Expensive)


• PEG Ratio: 1.3


• 1-Year Return: +37.53%


• Institutional Holdings: 37.55%


• Market Cap: ₹91,781 crores

Investors should continue to monitor SRF Ltd.’s quarterly results and sector developments to reassess the stock’s outlook in line with evolving market conditions.

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