Vedanta Shares Adjust Following Major Corporate Demerger

Shares of Vedanta adjusted to the company’s much-awaited demerger on Thursday, appearing to have crashed nearly 65% on NSE. However, in reality, the stock declined 5% after beginning to trade without the value of its four demerged entities.

After closing at Rs 773.60 on Wednesday, the stock opened sharply lower at Rs 289.50 on Thursday. Vedanta shares hit an intraday low of Rs 271.5 apiece on the NSE, marking a sharp 64.9% plunge from the previous close. The drop pulled the metal major's market capitalisation down to Rs 1.13 lakh crore from Rs 3 lakh crore.

The shares now trade without the value of four demerged units — Vedanta Aluminium, Vedanta Power, Vedanta Oil & Gas, and Vedanta Steel & Iron Ore — which will list separately on the BSE and NSE.

The special pre-open session (SPOS) ran from 9:15 am to 9:45 am on the stock exchanges to determine Vedanta’s share price adjustment post demerger, and the regular trading in the stock began at 10 am.

The Anil Agarwal-led conglomerate set May 1 as the record date for its demerger, which marks one of the biggest corporate restructurings in India’s metals and mining space. Since Friday (May 1) is a market holiday due to Maharashtra Day, Thursday (April 30) is the effective record date for the demerger.

Vedanta shares are currently part of the Nifty Next 50 index. On the global front, it is part of the MSCI Emerging Markets Index as well as the FTSE indices. According to Nuvama, Vedanta will continue to be part of the Nifty Next 50 index, while the soon-to-be-listed demerged entities (Aluminium, Power, Oil & Gas, Steel) will be reflected as dummy constituents until listing. The brokerage added that Vedanta’s weight will be auto-adjusted on MSCI and FTSE indices.

Vedanta's demerger is a well-structured move that should unlock shareholder value over time, said Raj Gaikar, Research Analyst at SAMCO Securities. When businesses like aluminium, zinc and oil & gas begin to trade independently, markets tend to value them more fairly than when they are bundled together in a single conglomerate, he added.

Vedanta had first announced its demerger plans in 2023, aiming to split its Indian operations into six separately listed companies, including a standalone base metals entity. Over time, the structure was revised. The demerger, however, faced significant delays, largely due to objections raised by the government.

The metal conglomerate’s long-awaited demerger plan received the National Company Law Tribunal’s (NCLT) approval in December last year. Under the approved scheme, the base metals business will remain within a restructured Vedanta, while four new listed companies will be carved out. The restructured Vedanta will continue to house the zinc and silver businesses through Hindustan Zinc and is envisaged as an incubator for future ventures.

Vedanta Chairman Anil Agarwal, in an interview with the Financial Times, said that the long-delayed restructuring could create “phenomenal shareholder value”. He said that the new entities emerging from the conglomerate will have a free hand to grow. A privately held parent company controlled by Agarwal will retain roughly half the shareholding in each of the demerged entities, he added.