Noida, Apr 30 (APAC Media): Shares of Vedanta Limited tumbled more than 60 per cent in a special trading session on Thursday as the stock turned ex-demerger, a move that triggered a sharp but largely notional decline in its market price.
In a special pre-open session held by stock exchanges for price discovery, shares of Vedanta Limited were discovered at around Rs 290, sharply lower than the previous close of about Rs 773.
The decline was largely technical and does not indicate any weakening of the company’s fundamentals but reflects the adjustment in value following its ongoing corporate restructuring.
“The company has fixed May 1 as the record date for the demerger. Shareholders holding one share of Vedanta Limited as of April 29 will receive four additional shares in the resulting entities. We are targeting the listing and commencement of trading of these shares by the first quarter of FY27. The demerger has been structured with precision in terms of capital allocation, aligning debt with the earnings profile and growth stage of each resulting company,” said Ajay Goel.
The demerger scheme of Vedanta Limited, among the largest restructuring exercises in India’s natural resources sector, entails the separation of its core business verticals into independent entities, including aluminium, oil and gas, power, and iron and steel, each of which is slated for separate listing.
“Vedanta Limited’s oil and gas, and iron and steel businesses will emerge as near-zero net-debt entities post-demerger, while the remaining three verticals will carry net debt-to-EBITDA ratios aligned with their respective debt servicing capabilities,” Goel added.
Shareholders of Vedanta will receive one share in each of the newly demerged companies for every one share they currently hold.
As a result, the value of these spun-off businesses has been deducted from Vedanta’s share price, leading to the sharp decline seen during the session.
“The fall is purely on account of the stock trading ex-demerger. Investors should not interpret this as wealth erosion, as the value is being redistributed across multiple entities,” a market analyst said.
The record date for the demerger has been set for May 1, which is a market holiday, prompting exchanges to hold a special trading window to determine the adjusted price. Analysts had earlier projected that the residual Vedanta entity would trade in the range of Rs 300–Rs 325 post-demerger, broadly in line with the discovered price.
The restructuring is aimed at unlocking value by creating focused, sector-specific entities with independent management and capital allocation strategies, a move expected to improve operational efficiency and offer investors more targeted exposure to distinct segments of the natural resources business.
The company had earlier stated that the demerger is aimed at simplifying Vedanta’s corporate structure by creating sector-focused, independently managed businesses.
It added that the restructuring would open up opportunities for global investors, including sovereign wealth funds, retail participants, and strategic investors, to gain direct exposure to dedicated pure-play companies, linked to India’s growth story through the group’s asset base.
Disclaimer: Views expressed are those of experts and do not reflect APAC Media. This is for informational purposes only, not financial advice. We are not responsible for investment decisions. Please consult a qualified financial advisor before investing.
Also Read:
Discussion about this post