Arvind Ltd, the fibre-to-garment textile major, got split into Anup Engineering and Arvind Fashions. For every five shares of Arvind Ltd, investors would get one share of Arvind Fashions.
Arvind Fashions was expected to list in the range of Rs 1,200 to 1,400 per share, as per some brokerage estimates. Instead, at 9.45 am, it got listed at Rs 591.75, post which it hit an upper circuit of Rs 621.3 by 10 am.
Arvind Ltd, the fibre-to-garment textile major, got split into Anup Engineering and Arvind Fashions. For every five shares of Arvind Ltd, investors would get one share of Arvind Fashions.
Generally, for stocks that get listed in pursuance of a demerger scheme, there is a half an hour window (from 9.15 to 9.45 am) for price discovery. Post this, the stock is available for trade.
Ideally, the base price for Arvind Fashions should have been around Rs 1,500 (Rs 311x5), after which, the stock price should have been discovered on the exchanges from 9.45 am. Rs 311.5 represents the share price of Arvind Ltd immediately before the demerger date (ie as on November 27, 2018).
However, the exchanges considered the pre-demerger closing price of Arvind Ltd (Rs 311) as the base price, which resulted in the listing fiasco.
