Vedanta share price jumps over 4% on demerger plan; analysts positive for long-term, caution on high debt
₹232.35 apiece on the BSE. In a move to unlock value for its shareholders, the billionaire Anil Agarwal-led Vedanta Group unveiled a complete overhaul of its Indian metals, mining, and energy conglomerate, Vedanta Ltd.
Under the proposed demerger, the existing company will be split into Vedanta Aluminum, Vedanta Oil and Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and Vedanta Ltd. Read here: Vedanta to demerge biz into six firms Shareholders will receive additional one share of each newly listed entity for one share held in Vedanta.
The demerger and listing of separate business units is expected to take 12-15 months, subject to all the necessary approvals. Analysts believe the newly listed demerged companies are expected to unlock stakeholder value, attract strategic investment and improve competencies.
“We believe this move will have a positive long-term impact, as it will give the group flexibility, unlock value for investors (give them the choice of commodity they want to invest in) and the parent company would have the option to liquidate fully/partly particular assets to manage its debt repayments," said Vikash Singh, Research Analyst at Phillip Capital. The brokerage firm upgraded Vedanta to Buy and has an unchanged target price of ₹290 per share.
(Exciting news! Mint is now on WhatsApp Channels Subscribe today by clicking the link and stay updated with the latest financial insights! Click here!) Kunal Kothari, Research Analyst - Metals & Mining at Centrum Broking believes the demerger into six entities is the right step and unlock value for investors in future. “Currently, the large focus is on the debt repayment obligation of the parent company which is under stress and the course
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