HEG share price falls over 64% to ₹260: Don’t panic! Here’s what actually happened

HEG Ltd’s stock price appeared to suffer a dramatic collapse on Monday, September 7, leaving investors looking at a fall of 64% on their trading screens. The stock, which had closed at approximately ₹728 on Friday, opened at around ₹260 today, creating the appearance of a massive wealth erosion within a single trading session.

However, investors should not mistake the sharp fall displayed on their screens for an actual destruction of value. There has been no financial meltdown at HEG and no catastrophic negative development behind the sudden decline. Instead, the steep adjustment is directly linked to the company’s demerger, which has resulted in its share price being recalibrated to reflect the separation of a major part of its business.

September 7 is the official ex-date for the HEG demerger. As a result, the stock exchange has adjusted the trading price of the existing listed entity to account for the value of the business being transferred into a separate company.

This is why the movement can look particularly alarming. In fact, against the exchange’s newly adjusted base price of around ₹260, the stock has actually jumped 5% from its true adjusted value to its day's high of ₹273.

For existing shareholders, the value has not disappeared. Instead, a portion of the business value is being repositioned into a new entity through the demerger.

HEG Demerger Details

Under the approved scheme of arrangement, HEG’s business has been divided into two distinct entities, with shareholders receiving shares in the newly carved-out company under a 1:1 demerger ratio.

The existing listed company is HEG Advanced Materials Ltd, which has been renamed and will focus on advanced materials and carbon applications. It will also retain the company’s advanced materials, battery energy solutions and green power businesses.

The second entity is HEG Graphite. The company is proposed to be separately listed as a pure-play graphite electrode business and, following its listing, is proposed to be renamed HEG Limited.

For every one fully paid-up equity share of HEG Advanced Materials Limited held by shareholders as of the record date, investors will receive one fully paid-up equity share of face value ₹2 each in HEG Graphite Limited.

This means an investor who held one HEG share before the demerger will automatically be entitled to one share of the newly formed HEG Graphite.

There is also an amalgamation arrangement involving Bhilwara Energy Limited. Under this arrangement, HEG Advanced Materials Limited will issue eight equity shares of ₹2 each to existing shareholders of Bhilwara Energy Limited, excluding HEG Advanced Materials Limited, for every seven equity shares of ₹10 each held in Bhilwara Energy.

HEG Graphite is expected to be listed on the stock exchanges in the second half of October 2026. Once that listing takes place, the company is proposed to be renamed HEG Limited.

The leadership structure of the new entity has also been outlined. Ravi Jhunjhunwala will take charge as Chairman, Managing Director and Chief Executive Officer of HEG Graphite Limited with effect from September 1, 2026. At the same time, he will continue to serve as a director on the board of HEG Advanced Materials Limited.

Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.