HEG shares opened nearly 64% lower on Monday as the stock adjusted for the company's demerger, which split its businesses into two separately listed entities.

Under the restructuring, HEG's graphite electrodes business will move to a new entity, HEG Graphite. The existing listed company will retain the advanced materials, battery energy solutions and green power businesses, and will be renamed HEG Advanced Materials.

Graphite electrodes are a key consumable in electric arc furnace (EAF) steelmaking, and the segment has historically been HEG's core operation and principal revenue driver. The demerger separates that commodity-linked business from the company's newer advanced materials and battery energy ventures.

The sharp opening decline reflects the demerger adjustment rather than a market-driven selloff. When a company demerges, the share price of the existing entity typically adjusts to exclude the value of the business that has been hived off into the new listed entity, so shareholders' overall value is not necessarily reduced by the price gap.

What does this mean for HEG shareholders?

For HEG shareholders, the demerger means their holdings are effectively divided across the two resulting companies. The graphite electrodes business, historically HEG's core operation, will be held through HEG Graphite, while the remaining listed entity, HEG Advanced Materials, will carry forward the advanced materials, battery energy solutions and green power businesses.

The company has also announced leadership changes alongside the demerger.

Following such adjustments, exchanges typically recalculate the stock's price bands and it may drop out of indices that track it, triggering passive fund rebalancing — a mechanical effect worth monitoring in the sessions after the split. Shareholders will be able to track the two businesses separately once HEG Graphite lists.

Source: Economic Times Markets