Vedanta Demerger: Shareholders approve proposed 5 unit plans – key things to know

Vedanta Ltd.

The restructuring will result in the creation of five separate, department-specific entities, and management is expected to complete the process by the first quarter of 2026.

The earlier plan was to divide the existing listing entities into six independent listing companies. However, earlier this year, the company announced that it would not make its base metal units stand out and that will take that into account in the future once the business matures and realizes the full potential of shareholders to create value.

The key things to know

Demerger Approval: A Step to Transformation

On February 18, 2025, Vedanta convened a meeting with shareholders, secured creditors and unsecured creditors, all of which overwhelmingly supported the restructuring plan. Regulatory documents dated February 20, 2025 confirmed these approvals, an important milestone in Vedanta’s strategic transformation.

Although the plan has cleared major obstacles, it still requires statutory, government and regulatory approval. If implemented successfully, the site can position Vedanta as enhanced agility, better growth prospects, and improve stakeholder value creation.

The shares were supported by 99.99% of shareholders, 99.59% and 99.95% of mortgaged creditors and 99.95% respectively.

DEMERGER Plans and Reasons

The five newly formed entities will include:

Vedanta Aluminum – One of the largest aluminum producers in the world.

Vedanta Oil & Gas – India’s leading private-sector crude oil producer.

Vedanta Power – a major player in the power generation sector.

Vedanta Iron and Steel – specializes in the iron products industry.

Vedanta Ltd. – continues to serve as parent company, incubating emerging companies among emerging companies including technology.

Current shareholders of Vedanta Ltd. will acquire shares in five new companies. The move is designed to provide investors with industry-specific flexibility to invest based on their market strategy and risk needs. Over time, these independent units are expected to attract different investor groups, foster deeper collaboration and unlock industry-specific growth opportunities.

Review

According to Emkay Global, investors are expected to be bullish on Vedanta Ltd. and its aluminum and electricity entities. Currently, Vedanta trades at enterprise value, and its multiple of EBITDA is less than 5 times. Assuming that EBITDA is about ₹The fiscal year 2026 is 50,000 million, and the debt burden is ₹60,000 million. At the end of the day, each company can command a valuation of 6 to 7 times based on its industry trends.

Given the increasing emphasis on captive raw materials such as alumina, coal and bauxite, these alumina segments are expected to increase value, which may reduce production costs. Meanwhile, Vedanta Ltd. will continue to hold the group’s zinc assets, including 63% of the shares of Hindustan zinc and its international zinc business. However, the copper business of an out-of-reach entity may be slightly valued.

The value of industries such as oil and gas, electricity, and iron and steel may be in multiples of 5.5 to 6 times. In general, part of the valuation of Vedanta’s business can be approximately as high as ₹Over the next six months, the potential upside potential for shareholders is 2.7 billion more than the current corporate value. This could lead to Vedanta Ltd. being excellent in the short term.

Financial performance

Vedanta Ltd. reported strong financials for the December 2024 quarter, with revenue up 10% year-on-year (YOY) to ₹385.3 billion, compared to ₹349.7 billion in the same quarter last year. Net profit soared 76% ₹35.5 billion, from ₹20.1 billion. Merged EBITDA jumped 30% ₹112.8 billion, profit margin increased to 34%.

Vedanta publishes revenue throughout the fiscal year 2024 ₹143.7 million, reflecting a 2.4% drop. Net profit during the period ₹7.5 million, the economy is sluggish compared to previous years. The company’s strong performance in the 24th fiscal year of EBITDA performance in Q3, driven by cost optimization and higher production across key business areas, highlighting its focus on operational efficiency and profitability.

Looking to the future

With the development of Vedanta, strategic restructuring is expected to unlock huge value for investors while ensuring higher operational efficiency. With the sector-specific growth prospects and potential to improve valuations, this barrier could be a key step in reshaping Vedanta’s long-term trajectory. Now, shareholders are awaiting further regulatory approval and final execution, which will determine the full impact of this transformative company migration.

Disclaimer: The views and suggestions presented above are those of individual analysts or brokerage firms, not mint. We recommend that investors contact certified experts before making any investment decisions.