In the past 2-3 years, a lot of companies have demerged their business and listed their business separately. We will start our analysis by looking at some past data points.
Here are few companies which de-merged in last 3 years
- Arvind
- Sintex Industries
- HSIL
- Reliance Capital
Some important news regarding demerger of the above companies.
Sintex Industries: https://economictimes.indiatimes.com/markets/stocks/news/investors-should-be-wary-of-sintex-plastics-analysts/articleshow/69797289.cms?from=mdr
Reliance Capital: https://www.moneycontrol.com/news/business/stocks/reliance-capital-shares-fall-17-as-home-finance-business-demerged-2378947.html
Now, a very important data point to note here is most of the stocks performed badly after the demerger record date. They neither locked value for investor nor saved investors capital. Now let us check charts of these companies
Arvind: Arvind went ex-demerger near Dec18.
Arvind Fashion: Demerged entity
Sintex Industries: Sintex went ex-demerger near May 18. Now see the stock price.
Sintex Plastic: Demerged entity
HSIL: Stock went ex-demerger near Sep 18. The demerged entity was listed 2 days ago and continuously stuck in lower circuit
Till now I have seen only 1 company where De-merger went in favour (Adani Enterprise) of investors otherwise investors have always lost money during the de-merger.
I hope this post was helpful to you.
Happy Learning.
