Corporate restructuring picks pace as India Inc's mantra to unlock value

Aditya Birla Lifestyle Brands latest to list; more on the anvil

India Inc’s push to unlock value through demergers and separate listings of focused verticals is now bearing fruit. This month, units of Quess Corp, Siemens, and Aditya Birla Fashion and Retail (ABFRL) debuted on the stock market. 

Raymond’s real estate arm, Raymond Realty, is set to list on July 1, while Tata Motors’ passenger vehicle (PV) business, including Jaguar Land Rover, is expected to go public by calendar year-end. Vedanta, wh­ich plans to spin off three units, is awaiting National Company Law Tribunal (NCLT) approval. Earlier this year, ITC’s hotel business listed independently. Analysts highlight that corporate restructuring aims to create leaner, sector-specific entities, making it easier to attract talent and investors. 

“Demergers alone don’t guarantee value creation. The rationale and execution are critical,” says Deven Choksey, MD, DRChoksey FinServ. “Listing-focused verticals draw sector-specific investors and talent, which can be challenging in a conglomerate setup.” 

Results of recent demergers have been mixed. Aditya Birla Lifestyle Brands (ABLBL), demerged from ABFRL in May, listed on Monday with a market cap of ₹19,450 crore. ABLBL houses brands like Louis Philippe, Van Heusen, Allen Solly, and Peter England, while ABFRL’s valuation sta­nds at ₹9,110 crore. Pre-demerger, the combined value was ₹33,000 crore. 

Last week, Siemens Energy India, spun off from Siemens Ltd, listed at over ₹1 trillion. Post-listing, the combined val­ue of the two entities reached ₹2.14 trillion, up from ₹1 trillion pre-demerger, reflecting significant value creation. Experts note that immediate listing gains may be modest, but well-managed units can generate substantial value over the medium to long term.   

“Conglomerates often face a holding company discount of over 50 per cent. A well-executed demerger can help mitigate this discount. However, the resulting standalone entities must be self-sufficient with compelling growth stories,” said an analyst, who wished to remain anonymous. 

Motilal Oswal projects a 19 per cent upside for ABLBL, setting a target price of ₹190 per share based on EV/ Ebitda multiple of 15x for FY27. 

Raymond Realty, hived off from Raymond Ltd, will debut next week. It operates brands like TenX, The Address, and Invictus, owning 100 acres in Thane. With six joint development agreements, it has a gross development value of ₹40,000 crore per company estimates. Its listing performance will be closely watched. 

Other demerger exercises keenly eyed by the markets are in blue chip firms Tata Motors and Vedanta. Tata Motors passenger vehicles will list separately and focus on the PV business, while the current entity will house the commercial vehicles business.    Meanwhile, the spinoff of Vedanta will create four independent, sector-focused entities — Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Iron and Steel, and other existing and new businesses. Currently valued at ₹1.75 trillion, Vedanta’s aluminium business alone is estimated at ₹1.2 trillion. 

 

Analysts expect the combined market cap of the new entities to surpass the current valuation. 

Quess Corp three-way demerger created Digitide Solutions (digital and IT staffing), Bluspring Enterprises (facility management and industrial services), and Quess Corp (core workforce management and general staffing).