Global brokerage UBS maintained its Sell rating on SRF Limited while cutting its target price to ₹2,300 from ₹2,400, and slashing earnings per share estimates by 11–13% — a significant downward revision that reflects a deteriorating outlook across two of the company’s most important business segments. The brokerage’s note, titled “Challenging environment continues,” paints a cautious picture for SRF heading into FY27.
The first concern is refrigerants. UBS flagged that refrigerant prices are now close to their peak, implying limited upside from the current cycle and a higher risk of a mean-reversion in pricing over the coming quarters. SRF has been a significant beneficiary of the global refrigerant upcycle driven by the HFC-to-HFO transition and supply tightness — but UBS believes that tailwind is now largely priced in, and the margin expansion from refrigerant operations is unlikely to sustain at current levels.
The second concern is agrochemicals. UBS highlighted uncertain demand in the global agchem space, noting that while rising farm input prices have provided some offset to the sluggish demand environment, higher crop prices have only partially compensated. Global agchem inventory destocking — a theme that has weighed on Indian specialty chemical exporters for over two years — continues to create an unpredictable demand picture for SRF’s chemicals business.
The third and more complex headwind flagged by UBS is the Iran conflict. The brokerage noted the impact of the Iran war on the chemical space is complex — elevated crude and energy prices raise input costs for chemical manufacturers, while supply chain disruptions and freight cost inflation through the Strait of Hormuz route add further margin pressure. For a company like SRF, which has global export exposure in both fluorochemicals and specialty chemicals, these geopolitical variables add a layer of uncertainty that is difficult to model with precision.
UBS’s revised target price of ₹2,300 implies meaningful downside from current levels. Meanwhile, shares of SRF were trading at ₹2,520 — up 1% in early trade on Monday — suggesting the market has not fully priced in the brokerage’s bearish thesis, and that the stock continues to trade at a premium to UBS’s fair value estimate.