Why is Shankara Building Products share price reflecting a 75% crash in value? Explained

Small-cap stock Shankara Building Products (SBPL) witnessed a significant drop in its share price on Wednesday, September 24 — a move that raised concerns among retail investors. Shankara Building Products' share price crashed 75% from its last close of ₹990.50 on the National Stock Exchange (NSE).

However, investors need to worry as this fall is not a result of poor financial performance or market sentiment, but a technical adjustment following the demerger.

Shankara Building Products has transferred its trading business to Shankara Buildpro, wherein shareholders of SBPL were allotted one share of SBL for every one share held in the original company. With today being the record date, the adjustment in share price is getting reflected.

Therefore, the drop in Shankara Building Products' share price is directly linked to the company’s approved Scheme of Arrangement with Shankara Buildpro (SBL) — a newly formed entity.

What explains the 75% fall in Shankara Building Products?

According to the company’s cost apportionment guidance, about 65.81% of the original value is attributed to Shankara Buildpro, and only 34.19% remains with Shankara Building Products.

For instance, if Shankara Building Products' share price was trading at ₹1,000 before the demerger, it would trade around ₹341.90 post-demerger, reflecting the retained business. The remaining ₹658.10 in value is now represented by Shankara Buildpro shares.

This decline is not a loss, but a notional fall due to the reorganisation of the business. Investors must note that they now hold a stake in two companies, with the combined value of their holdings remaining the same.

Shankara Building Products' share price, however, did decline in trade today. It hit the 5% lower price band of ₹242.25 as against its adjusted price of ₹255.

In the first quarter of the financial year 2025-26 (FY26), Shankara Building Products reported a 102% rise in net profit to ₹32 crore on a year-on-year (YoY) basis, even though the figure was lower by 14% on a sequential basis.

Meanwhile, revenue from operations jumped 27% YoY to ₹1,644 crore. On a QoQ basis, revenue was flat.

Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.