Crompton Greaves quotes ex-demerger

As we all are well aware, Crompton Greaves has demerged its consumer business - Crompton Greaves Consumer Products (CGCP). This is obviously to capitalise on the potential value of CGCP.

As per the deal, the shareholder of Crompton Greaves will get one share of CGCP for every share held, 1:1 ratio. Now tomorrow is the record date and that means, today is the ex-demerger date. And this is usually the trend – the moment the stock turns ex-demerger, the stock price plunges over 50% and here, by over 70%. This is adjustment price – the stock price of Crompton Greaves today does not incorporate the price of its consumer business. Thus the plunge, which is why it is  the top loser and will remain so through the day; after all it is down over 70% - yesterday it closed at Rs.155 and today, it is at less than Rs.50.

The consumer business company or CGCP will also get listed, expected sometime around April and the word on the street is that it could be around Rs.100-110/share ( closing price of Rs.155 minus todays price).