Vedanta Limited (VEDL), a leading mining and metals company in India, has seen its share price rise sharply after the company announced that its demerger proposal has received approval from 75% of its secured creditors. The demerger aims to simplify Vedanta’s corporate structure by creating independent businesses, providing global investors with direct investment opportunities in pure-play companies.
As of July 31, 2024, Vedanta’s share price on the National Stock Exchange (NSE) closed at ₹463.35, up 2.42% from the previous day’s close. The stock touched an intraday high of ₹471.50 and a low of ₹457.20. On the Bombay Stock Exchange (BSE), the stock closed at ₹463.35, up 2.41% from the previous close.
Vedanta plans to demerge its businesses into six separate entities: Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals, and Vedanta Limited. The demerger will follow a simple vertical split, where shareholders will receive 1 share of each of the 5 newly listed companies for every 1 share of Vedanta Limited they hold.
The company has a strong track record of delivering significant returns to its shareholders. As of June 30, 2024, Vedanta’s total shareholder return over five years was 276%, and the five-year average accumulated dividend yield stood at 65%.
Vedanta is India’s largest producer of aluminium and largest private sector producer of oil, along with being one of India’s largest generators of power and purchasers of renewable energy. The company’s diversified portfolio of metals and minerals, including zinc, lead, silver, copper, iron ore, steel, and aluminium, makes it a key player in the Indian mining and metals industry.
The demerger proposal has received a positive response from the market, with investors and analysts seeing it as a strategic move to unlock value and provide better focus on each business segment. The move is also expected to improve the company’s operational efficiency and reduce debt levels.
In a separate development, Vedanta has received an assessment order determining a demand of ₹12,890.30 crore, including tax and interest, from the Income Tax Department for the Assessment Year 2020-21. However, the company has identified a computational error in this demand determination and will file a rectification request before the Jurisdictional Assessing Officer (JAO).
