Vedanta Share Price Recovers Intraday Losses After Shareholders Approve Demerger Plan
Vedanta Ltd.’s stock price rebounded from early losses and moved higher on Tuesday, following the mining conglomerate’s announcement that shareholders and creditors had overwhelmingly approved its proposed demerger. The stock gained as much as 0.96% to reach ₹427.50 per share on the Bombay Stock Exchange (BSE).
Strong Support for it’s Demerger Plan
In the meetings held on February 18, the shareholders, secured creditors, and unsecured creditors of the company voted in favor of the company’s restructuring. The voting results demonstrated near-unanimous support:
- 99.99% of shareholders backed the demerger.
- 99.59% of secured creditors gave their approval.
- 99.95% of unsecured creditors also voted in favor.
A regulatory filing by Vedanta Ltd. on February 20 confirmed the approval, reinforcing confidence in the restructuring move.
The company’s Demerger: Key Highlights
Vedanta first announced its demerger plan in 2023 as part of a broader strategy to unlock value for investors. The plan involves splitting Vedanta Ltd. into five independent sector-specific companies:
- Its Aluminium Metal Ltd. – One of the world’s largest aluminium producers.
- Its Oil & Gas Ltd. – India’s largest private-sector crude oil producer.
- Talwandi Sabo Power Ltd. – A key player in India’s power generation sector.
- Malco Energy Ltd. – An energy-focused company with diversified interests.
- Its Iron and Steel Ltd. – A company with a strong and scalable ferrous portfolio.
Under this demerger plan, each of the company shareholder will receive one additional share in each of the four newly formed companies upon completion of the restructuring.
It’s Future Strategy
Post-demerger, Vedanta Ltd. will continue to operate its world-class businesses, including:
- Hindustan Zinc – The world’s second-largest integrated zinc producer and third-largest silver producer.
- It’s technology verticals – A segment that will focus on emerging industries and innovation.
According to analysts, this strategic move aims to enhance business focus, improve operational efficiency, and attract sector-specific investors to each demerged entity.
Vedanta Share Price Performance & Market Response
Following the demerger approval, Vedanta’s stock showed resilience despite initial volatility. At 10:50 AM on February 20, Vedanta shares were trading 0.58% higher at ₹425.85 per share on the BSE, with a market capitalization exceeding ₹1.66 lakh crore.
The demerger approval has led to positive sentiment in the market, as investors anticipate potential long-term value creation. However, some concerns remain regarding high debt levels and pledged promoter holdings, which may influence stock performance in the coming months.
Vedanta: Key Financial Metrics
To provide a clearer picture of Vedanta’s financial standing, here are its latest key financial ratios and stock performance indicators:
| Metric | Value |
|---|---|
| Market Cap | ₹1,67,932 Cr. |
| Current Price | ₹429 |
| 52-Week High/Low | ₹527 / ₹250 |
| Stock P/E | 14.1 |
| Book Value | ₹95.9 |
| Dividend Yield | 10.2% |
| ROCE (Return on Capital Employed) | 20.9% |
| ROE (Return on Equity) | 10.5% |
| Debt to Equity Ratio | 2.13 |
| Promoter Holding | 56.4% |
| Pledged Shares | 100.0% |
| QoQ Profits | -13.0% |
| Qtr Profit Variation | 76.2% |
| Industry P/E | 16.4 |
| Graham Number | ₹269 |
| Intrinsic Value | ₹250 |
| RSI (Relative Strength Index) | 44.6 |
| EPS (Earnings Per Share) | ₹33.6 |
| PEG Ratio | -1.19 |
| 200-Day Moving Average (DMA 200) | ₹431 |
| Free Cash Flow (Last 3 Years) | ₹63,166 Cr. |
| Free Cash Flow (Latest Year) | ₹19,097 Cr. |
What Lies Ahead for Vedanta Investors?
The approval of the demerger plan marks a crucial turning point for Vedanta Ltd. The move is expected to unlock greater value for investors by creating separate, focused entities that can operate more efficiently and attract sector-specific capital.
However, investors should also consider Vedanta’s high debt levels, 100% pledged promoter holdings, and fluctuating profitability before making investment decisions.
Conclusion
Vedanta’s demerger approval has provided fresh momentum to its stock, with strong backing from shareholders and creditors. While the restructuring promises long-term value creation, the stock’s near-term performance may depend on market sentiment, debt reduction plans, and operational execution.
For investors tracking Vedanta share price trends, key support and resistance levels along with fundamental financial indicators will be crucial in determining future stock movements.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.