Vedanta to have special trading session for demerger today. What to expect

The shares of Vedanta will begin to trade excluding the value of its four demerged entities after a special pre-open session today, appearing to significantly lower in value while in reality they will simply adjust to the much-awaited corporate restructuring.

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

The Anil Aggrawal-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.

What to expect for Vedanta's share price

Vedanta shares jumped nearly 5% to close at Rs 773.60 apiece on NSE on Wednesday. However, today it will adjust to the demerger and appear to fall in value as it begins to trade excluding the four demerged entities.

Vedanta shares are expected to trade in the range of Rs 300-325 per share after the special pre-open session, ICICI Direct said in a recent report. It is important to note that the firm’s estimate is indicative, as it awaits exact allocation of net debt across the resulting entities. The market price of Vedanta during the release of the report stood at Rs 720 per share.

Sunny Agrawal, Head of Fundamental Research at SBI Securities, meanwhile said that the fair value of the residual base metal business and its holding in Hindustan Zinc will remain in the range of Rs 250-290 per share after the special pre-open session. "Due to adjustments in the active and passive funds, volatility is likely to be on the higher side for the next few days," he said.

The special pre-open session on April 30 is the moment Vedanta's three-year-old demerger story finally meets the market's price-discovery machinery, said Harshal Dasani, Business Head at INVasset PMS. According to the analyst, Vedanta shares excluding the demerged entities will likely open in the range of Rs 300-325 apiece, anchored largely by its 63.4% stake in Hindustan Zinc, copper, ferro chrome and the emerging displays venture.

"The remaining roughly Rs 400-475 of pre-demerger value transfers into the four spun-off entities - aluminium, power, oil & gas, and rron & steel — that shareholders will hold as 1:1 entitlements pending listing over the next four to eight weeks. Aluminium is clearly the crown jewel: 2.8 MTPA capacity, expanding EBITDA per tonne, and tight global supply make it the most likely beneficiary of pure-play re-rating. Together with Hindustan Zinc, it should command the bulk of group value once the conglomerate discount unwinds,” according to Dasani.

That said, the analyst pointed out two variables that will determine whether the sum-of-the-parts valuation (SOTP) of Rs 820-900 actually crystallises — the final allocation of net debt across the five entities, and the speed of regulatory clearances for listing. "For long-term investors, this is a value-unlocking event, not a trading event. Position for the listings, not the open," he said.

Vedanta’s index positioning

After the demerger, Nuvama Institutional Equities expects Vedanta to have a market capitalisation of nearly Rs 1.14 lakh crore. Notably, Vedanta had a market capitalisation of more than Rs 3 lakh crore at the end of the session on Wednesday. “Based on our market-cap estimates, Vedanta and Vedanta Aluminium are expected to be classified as large caps, while Vedanta Power, Vedanta Oil & Gas, and Vedanta Steel & Iron Ore fall under small cap,” it added.

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

When will the four new Vedanta stocks list on BSE and NSE?
As a part of the demerger, each of Vedanta’s eligible shareholders will get one share of Vedanta Aluminium Metal (VAML), one share of Talwandi Sabo Power (TSPL), one share of Malco Energy and one share of Vedanta Iron and Steel, for every share held in Vedanta. However, the dates for the four new listings have not been disclosed yet.

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

The demerger plan subsequently received approval from the National Company Law Tribunal (NCLT) 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 Q4 Results

Metals major Vedanta on Wednesday reported a 92% year-on-year (YoY) surge in consolidated net profit to Rs 6,698 crore for the March-ended quarter, while revenue from operations surged 47% YoY to Rs 24,609 crore during the quarter under review.

Vedanta also posted its best-ever earnings before interest, taxes, depreciation and amortisation (EBITDA) at Rs 18,447 crore, rising 59% YoY, while the EBITDA margin rose 44%, up by 915 bps YoY.

Also read: Vedanta demerger record date, how much money can you make and should you invest in buy 1, get 4 offer?

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)