Hindware Homes Ltd. witnessed a sharp 11% surge in its stock price during trading on Friday, March 28, 2025, as the company’s board of directors approved a strategic demerger. The decision aims to create two separate listed entities, each focusing on distinct business segments.

The first company will cater to the consumer products segment, which includes kitchen appliances, consumer appliances, fixtures, fittings, and water heaters. Meanwhile, the second company will focus on the building products segment, covering sanitaryware, faucets, tiles, plastic pipes, and fittings.

Financial Performance: Building Products vs. Consumer Products

For the first nine months of FY25, Hindware Homes’ building products business contributed a massive 85.7% of total revenue, while the consumer products segment accounted for 14.3%. Despite its higher revenue contribution, the building products division reported an EBIT of ₹68.5 crore, whereas the consumer products business posted an EBIT loss of ₹27 crore.

Additionally, the company’s debt structure is significantly different for both segments:

• Consumer products business holds a net debt of ₹8 crore.

• Building products business carries a net debt of ₹665 crore, reflecting a higher financial burden.

Hindware Homes Stock Performance & Market Capitalisation

Following the demerger announcement, Hindware Homes' shares soared as much as 11% in early trade before settling at ₹208.25, up 7.1% for the day. However, the stock remains 55% lower than its 52-week high of ₹455, indicating a long road to recovery.

Despite recent gains, Hindware Homes maintains a total market capitalisation of ₹1,800 crore. Investors are now closely watching how the demerger strategy will impact the company’s future profitability and valuation.

Potential Impact of the Demerger

The demerger aims to create value for shareholders by allowing both businesses to operate independently with greater focus. Here’s what to expect:

1. Building products business will continue leveraging its strong revenue base and dominant market presence in sanitaryware and fittings.

2. Consumer products business is expected to benefit from dedicated leadership and strategic focus, possibly improving profitability over time.

3. The move could attract investor interest in both entities, as they will be valued separately based on their financials and growth potential.

Conclusion

The strategic demerger of Hindware Homes is a significant step towards unlocking business value. While the building products segment remains the company’s revenue driver, the consumer products division may require restructuring to improve profitability.

Investors are advised to keep an eye on further regulatory approvals and stock performance trends as the demerger process unfolds.

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