| Company | Value | Change | %Change |
|---|
Earlier this week, Vedanta’s shareholders & creditors approved the conglomerate’s demerger plan and the management expects the process to conclude by the end of the first quarter of financial year 2026. The demerger was approved by the board in September 2023 and the company has already received the No Objection Certificate (NOC) from the exchanges for the demerger.
The earlier plan was to split the existing listed entity into six separate listed companies. However, earlier this year, the company announced that it will not be demerging its base metals unit and that will be considered in the future once the business matures and realises the full potential for value creation for shareholders.
Post the demerger, existing Vedanta shareholders will receive one share each of the five new entities, which will have focus on Aluminium, Oil & Gas, Power, Steel and Iron and the existing listed entity, which will house the domestic and international zinc and copper business.
According to brokerage firm Emkay, investors will be more bullish on the currently listed entity Vedanta Ltd., along with the Aluminium and Power entities.
On the valuation front, Vedanta currently trades below 5 times Enterprise Value to EBITDA, assuming an EBITDA of nearly ₹50,000 crore in financial year 2026 and a debt of nearly ₹60,000 crore. However, the demerged entities may command a higher multiple of nearly 6 times to 7 times, depending on the nature of the business.
Bulk of the value will come from the Aluminium business, as it is well placed given the focus on higher captive sourcing of Alumina, Coal and Bauxite, which can reduce the cost of production for Aluminium.
Vedanta Ltd. will also house the Zinc business, which includes the 63% stake in Hindustan Zinc and also its international zinc business. That though, may get a mild negative value for its shut copper operations.
The oil and gas along with power and iron & steel businesses are likely to get multiples between 5.5 times to 6 times.
Hence, the sum of the enterprise value of individual businesses will be nearly ₹2.7 lakh crore, which is higher than the current enterprise value and excluding the net debt in the books, there leaves some upside potential for shareholders in the next six months.
Such a situation could lead to Vedanta relatively outperforming its peers in the near-term.
Shares of Vedanta ended 2.8% higher on Thursday at ₹435.35. The stock has not done much so far in 2025, currently down 2%.
(Edited by : Hormaz Fatakia)
