Oct 22 (Reuters) - Indian chemicals and polymers maker SRF (SRFL.NS) , opens new tab posted a steeper-than-expected drop in its second-quarter profit on Tuesday, hurt by sustained weak demand in its mainstay chemicals business and higher costs.

SRF reported a consolidated net profit after tax of 2.01 billion rupees ($23.9 million) for the quarter ended Sept. 30, down 33% from last year, in its seventh straight quarterly profit drop. Analysts were expecting a profit of 2.93 billion rupees, according to data compiled by LSEG.

The company's chemical business unit, which consists of specialty chemicals, fluorochemicals, and agrochemicals among others, contributes nearly 40% to its revenue and fell 5% in the quarter.

Total revenue grew 7.8% to 34.24 billion rupees, while total expenses jumped 13.7%, led by an increase in the cost of raw materials.

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KEY CONTEXT

The chemicals industry has been grappling with high inventory and destocking for the past few quarters, putting continuous pressure on their margins, according to analysts.

Jefferies analysts in a pre-earnings note called Q2 a "challenging quarter" for Indian chemical firms, saying crop protection demand remained weak in the quarter due to continuous destocking in Asia, the EMEA region, and parts of Latin America.

Refrigerant gas prices remained weak as export prices of hydrofluorocarbon (HFCs) from India were down 35% year-over-year in July, the brokerage added, citing trade data. SRF's fluorochemicals business, which is part of the chemical business unit, includes refrigerants, and industrial chemicals.

PEER COMPARISON

* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell

** The ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above the PT

JULY-SEPTEMBER STOCK PERFORMANCE

-- All data from LSEG IBES

-- $1 = 84.0480 Indian rupees

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https://www.reuters.com/markets/commodities/indian-chemicals-maker-srf-misses-q2-profit-view-weak-demand-higher-costs-2024-10-22/