Shares of Siemens Ltd. opened sharply lower on April 7, plunging over 50% to ₹2,450 after closing at ₹4,928.15 in the previous session. The dramatic fall is not due to any negative news or earnings miss, but rather a technical adjustment following the company’s demerger of its energy business.
As part of the demerger, Siemens India is spinning off its energy division into a new entity — Siemens Energy India. The demerger ratio has been set at 1:1, meaning eligible shareholders will receive one share of Siemens Energy India for every one share held in Siemens Ltd. The record date for the spin-off is today, April 7.
The stock is trading ex-demerger today, which means its price has adjusted downward to reflect the value of the spun-off business. In a special pre-open session held this morning, the derived value of Siemens Energy India was subtracted from the share price of Siemens India to determine the new opening level.
April 4 was the last day to buy Siemens shares under the T+1 settlement cycle in order to be eligible for Siemens Energy India shares. From today onward, the energy business will no longer be part of Siemens India’s operations.
While the notional loss appears drastic, the combined value of Siemens Ltd. and Siemens Energy India shares is expected to approximate the pre-demerger market capitalization.
Investors are advised to keep this technical adjustment in mind while evaluating their holdings in Siemens.
Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions.
