SRF may look to demerge performance films and foil business after scaling this milestone: Exclusive

Specialty chemicals manufacturer SRF Ltd. will look to demerger its performance films and foils business, once it reaches annual Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) levels between ₹1,000 crore to ₹1,200 crore, its Chairman and Managing Director Ashish Bharat Ram told CNBC-TV18 in an exclusive conversation. Once it reaches that level, the management said that the board and investors would be in a much stronger position to consider a separation of the business.

The SRF top brass spoke about how their focus is on creating more value for public shareholders and when asked whether the value unlocking will happen through the demerger of its three business verticals - chemicals, performance films and technical textiles, the CMD said the answer is not straightforward.

A key advantage of keeping the businesses together is cash fungibility. Technical textiles today is the group’s cash cow. If separated, it would generate large free cash flows. But inside SRF, that cash becomes fuel for faster growth in the chemicals and packaging divisions, according to Ashish Bharat Ram. In other words, consolidation lets the group allocate capital where higher-return opportunities exist rather than letting one segment sit idle as a standalone cash generator.

That’s the trade-off for shareholders, the company notes between immediate clarity of value from a breakup, and the potential for higher consolidated returns driven by internal capital redeployment. Management stops short of ruling out a future demerger, saying it remains a possible path if circumstances change.

The performance films and foils business reported EBIT of ₹356 crore during the full financial year, and has reported EBIT of ₹259 crore in the first half of financial year 2025.

Shares of SRF ended 1.5% lower on Thursday at ₹2,897. The stock has risen 31% so far in 2025.