What 2 million shareholders stand to gain from Vedanta demerger: Explained

Vedanta demerger impact on shareholders: Vedanta share price has been adjusted following its demerger into five entities. The demerger exercise by Vedanta has a direct impact on the holdings of its over 2 million shareholders. Let’s understand what the shareholders stand to gain from the corporate action.

Vedanta demerger impact on share price

On April 30, Vedanta shares traded lower because of the ex-date for the demerger of four companies from the already listed one. 

Vedanta shares opened at ₹289.50 on Thursday, April 30, as they began trading ex-demerger. The stock fell as much as 7.1 per cent from the opening price to the day’s low of ₹268.70 per share on the National Stock Exchange (NSE). The scrip touched an intraday high of ₹292. 

 

Shares of Vedanta settled at ₹271.50 after the demerger adjustment, against the previous close of ₹773.60. On the BSE, the counter closed at ₹271.60.  READ | Vedanta demerger moves past record date, street eyes index positioning

Vedanta shareholders to get shares of 4 companies

Under the composite scheme of arrangement, shareholders of Vedanta will receive equity shares of four companies in a 1:1 ratio. This means that an eligible shareholder of Vedanta will get one share of each of the demerged companies. 

The shares of the four companies will remain frozen in the demat account, and no trading will be allowed.

Vedanta demerger companies list

The four new companies that have been demerged from Vedanta are:

1. Vedanta Aluminium Metal
2. Vedanta Power
3. Vedanta Oil & Gas
4. Vedanta Iron & Steel

The residual company, Vedanta Ltd, will be available for trading as usual. It will house the Zinc/Silver business (HZ stake + Zinc International) and the base metals business. 

In total, a Vedanta shareholder will get equal representation in five companies.  READ | Vedanta demerger explained: Four new stocks, what investors should know

Vedanta demerger companies' listing

Once the other four entities are listed, for which a separate date will be announced after securing exchanges' clearance, the portfolio will adjust to normal, said Khushi Mistry, research analyst at Bonanza. 

According to Vedanta Resources CEO Deshnee Naidoo, Vedanta will file with stock exchanges this week for listing approval of its demerged entities, with shares expected to list and commence trading by mid-June.

Vedanta share price target after demerger 

Sunny Agrawal, Head of Fundamental Research at SBI Securities, said that he recommends a Buy call on Vedanta Ltd post demerger, as the Zinc business carries robust earnings potential underpinned by its industry-leading cost of production and increasing contribution of the silver segment. 

"We expect the fair value of Vedanta Ltd in the range of Rs 320 - Rs 330 in the medium to long term," he said. 

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