Share price of Vedanta rebounds 1% after securing nod for demerger

Highlights:

• Vedanta shares rebound after securing shareholder and creditor approval for the demerger.
• The company will be split into five independent sector-focused entities.
• Shareholders to receive additional shares in newly formed companies.

Vedanta Share Price Gains Amid Demerger Approval

Vedanta Ltd.'s stock price recovered on February 20 after shareholders and creditors approved its proposed demerger plan. The mining giant’s shares rose by 0.96% to ₹427.50 per share on the BSE, paring earlier intraday losses.

The approval was granted during meetings held on February 18, where most shareholders, secured creditors, and unsecured creditors voted in favour of the restructuring plan. As per the regulatory filing, the proposal received 99.99% approval from shareholders, 99.59% from secured creditors, and 99.95% from unsecured creditors.

Vedanta Demerger Scheme Explained

The Anil Agarwal-led Vedanta Ltd. announced its demerger strategy in 2023 to streamline its operations and enhance shareholder value. Under this scheme, Vedanta Ltd. will be split into five independent, sector-specific companies:

Vedanta Aluminium Metal Ltd. – Focused on one of the world’s most extensive aluminium production operations.

Talwandi Sabo Power Ltd. (Vedanta Oil and Gas) – A key player in India’s power generation sector.

Malco Energy Ltd. (Vedanta Energy) – Specializing in diversified energy solutions.

Vedanta Iron and Steel Ltd. – A scalable and growing ferrous business.

Vedanta Ltd. (Remaining entity) – Housing Hindustan Zinc, India’s most significant zinc and silver producer, incubator businesses in technology and other emerging industries.

As per the scheme, once the restructuring process is completed, existing Vedanta shareholders will receive one additional share in each of the four newly demerged companies.

Stock Market Reaction and Future Outlook

Following the announcement, Vedanta’s stock saw renewed investor confidence, with intraday gains reflecting positive sentiment.

The market cap on the company exceeded ₹1.66 Lakh crore while the shares were trading at ₹425.85, 0.58% high on BSE at 10:50 AM.

Conclusion

Vedanta’s demerger marks a significant step in its corporate restructuring journey. With strong shareholder backing and a strategic approach to business separation, the company has the potential for sustained growth in its respective industries. Investors will closely watch further developments as the demerger process unfolds in the coming months.