The Vedanta demerger announcement, made after the close of the Indian stock market on Friday, has set the stage for potential changes in Vedanta’s stock performance. With an Indian stock market holiday falling on Monday, the impact of the Vedanta demerger will become visible on Tuesday. Market experts suggest that the demerger, which involves the separation of Vedanta’s business into six distinct entities, could lead to value unlocking and attract investors focused on specific segments.
In this vertical split, every Vedanta shareholder will receive one share of the new entities for each share they currently hold. The six new companies resulting from the Vedanta demerger are Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals, and Vedanta Ltd.
Arun Kejriwal, Founder at Kejriwal Research and Investment Services, views the Vedanta demerger as an attempt to capture the attention of investors who select stocks based on specific segments. He suggests that this move should be seen as a rebranding of the company with a special focus on segment-oriented investing.
Regarding the impact on Vedanta shares, Avinash Gorakshkar, Head of Research at Profitmart Securities, believes there may be short-term movement in the stock, but the fundamentals of the individual companies resulting from the demerger will remain the same in the medium to long term. Gorakshkar points out that while the demerger represents value unlocking on paper, these business entities already exist on the ground.
The reaction of global investors and sovereign wealth fund managers to the Vedanta demerger remains to be seen, according to Gorakshkar.
On Friday, Vedanta share price closed at ₹222.65 on the NSE and ₹222.50 on the BSE. The stock witnessed a significant upside movement on Friday, likely fueled by prior rumors of potential value unlocking by Vedanta.
