Beyond the 54% Drop: What Investors Need to Know About SKF India

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SKF India shares appeared to plunge 54% intraday on October 15, 2025, following the demerger of its automotive business. However, the actual decline after adjusting for the corporate restructuring was only about 5%. This newsletter clarifies the true reason behind the sharp price adjustment and what investors should know going forward.

On October 15, 2025, SKF India’s shares opened at Rs 2,395.85 on the BSE, marking an apparent 54% drop from the previous close of Rs 5,010.75. This dramatic fall sparked alarm among investors and market watchers. However, this was not a typical market crash but an accounting adjustment due to the company’s strategic demerger of its automotive and industrial businesses.

The demerger, effective October 1, split SKF India into two independent entities. The current SKF India shares now represent the automotive business, while a newly created SKF India (Industrial) entity is expected to list on stock exchanges in November 2025. Shareholders are to receive one share of the industrial entity for every existing share held in the parent company.

Once this demerger adjustment is factored in, the stock's price decline is seen as a modest 5% dip, hitting a lower circuit of Rs 2,276.10. This represents the market’s reflection on the value of SKF India’s standalone automotive business post-demerger.

Important Points to Note

The 54% intraday "crash" was an accounting adjustment due to the demerger; the actual market decline was 5%.
The restructuring separates SKF India into automotive and industrial business units with dedicated managements.
Shareholders get one share of the new industrial entity for each parent share held.
The industrial entity’s shares are anticipated to debut in November 2025.
This move aims to enhance strategic focus, financial clarity, and operational agility for both businesses.
The combined valuation of both entities is expected to approximate the pre-demerger value.
Investors should independently analyze both companies based on respective business prospects.
The decline hitting the lower circuit price reflects market robustness responding to restructured valuation.

Major Takeaways

The dramatic 54% drop is a notional figure from post-demerger price adjustment.
Investor alarm should be tempered with understanding of the corporate restructuring process.
The separation enhances potential value unlocking by focusing each business more sharply.
SKF India (Industrial) listing will be a critical market event to watch.
The adjusted drop of 5% is a normal market reaction after significant corporate action.

This event underscores how restructuring can affect share prices temporarily and highlights the importance of context when interpreting stock market moves. Strategic corporate actions like this aim to create long-term shareholder value by aligning business focus and operational efficiency.

Sources Economic Times, ET Markets, ScanX Trade, MarketsMojo

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