This multibagger stock zoomed over 100% in one year; more upside likely

Shares of SRF Limited have doubled investors' money in the last 12 months. The stock rose 6 per cent to hit an intraday high of Rs 2,483 on the Bombay Stock Exchange (BSE) on Friday.
 
In the past one year, the share price jumped from Rs 1074.6 to Rs 2,483, logging around 131 per cent return in this period. An amount of Rs 5 lakh invested in this multibagger stock a year ago would have turned into Rs 11.5 lakh today.
 
Long-term investors have made big gains by investing in this stock as it has surged over 4,400 per cent in the last ten years. With a market capitalisation of more than Rs 72,000 crore, the shares stand higher than 50 day, 100 day and 200 day moving averages but lower than 5 day and 20 day moving averages.
 
Earlier this week, the company reported over 56 per cent rise in consolidated net profit at Rs 506 crore for the quarter ended December 2021 and has revised its annual revenue growth outlook to around 37 per cent. Profit in the year-ago period stood at Rs 324 crore.
 
Revenue from operations rose to Rs 3,346 crore in the same quarter from Rs 2,146 crore in the year-ago period. The board also approved a second interim dividend at the rate of 47.5 percent amounting to Rs 4.75 per share. Earlier on July 28, 2021, the board had approved the first interim dividend at the rate of Rs 12 per share.
 
Brokerage firm Reliance Securities believes an expanded product portfolio of specialty chemicals will continue to contribute on stronger demand from the overseas markets. It has raised the revenue and EBITDA estimates by 16/14/11 per cent and 21/20/18 per cent for FY22E/FY23E/FY24E, respectively.
 
"Considering the better business visibility and healthy exports outlook, we maintain our BUY rating on SRF and raise the SOTP-based 1-year Target Price to Rs 2,897 (earlier Rs2,604)," it added.
 
It expects SRF’s earnings to clock 31 per cent CAGR over FY21-FY24E, led by 27 per cent CAGR in revenue during the same period. The revenue growth is expected to be driven primarily by 29 per cent CAGR and 24 per cent CAGR in the chemicals and packaging films segments, respectively, over FY21- FY24E, while the technical textiles business is expected to clock 29 per cent CAGR over the same period.
 
The brokerage firm noted that the ‘China Plus one’ strategy shall continue to shift a major chunk of business from China to attractive locations like India. It expects the demand from agrochemicals to continue to sustain, though pharmaceuticals will have a relatively higher demand. The company is likely to benefit as it is heavily investing in the chemical business.
 
According to MarketsMojo, the company has declared positive results for the last 6 consecutive quarters and has high institutional holdings at 28.25 per cent. The stock is technically in a Mildly Bullish range. Multiple factors for the stock are Bullish like MACD, KST and DOW.
 
Established in 1970, SRF Limited is a chemical-based multi-business entity engaged in the manufacturing of industrial and specialty intermediates. The company’s business portfolio covers Fluorochemicals, Specialty Chemicals, Packaging Films, Technical Textiles, Coated and Laminated Fabrics.