Vedanta Demerger: Share Price Projections Emerge Ahead of Demerger Decision

Vedanta Demerger Set to Go Through Tomorrow

Vedanta, the metal and mining major, is set to undergo a demerger tomorrow, 30 April, as the company will reflect ex-spun off pricing. The special discovery session in the Anil Agarwal-led company will take place on 30 April, with both the BSE and NSE being shut on Friday for Maharashtra Day. As a result, today was the last day for investors to purchase Vedanta shares and enjoy demerger benefits.

Demerger Details

Vedanta will separate four of its businesses, which will be listed as separate entities. Each shareholder will receive 1:1 shares for each demerged entity. The four demerged entities are Aluminium, Power, Oil & Gas, and Iron & Steel. The residual Vedanta Ltd is expected to open in the ₹300-325 band, anchored largely by its 63.4% stake in Hindustan Zinc, copper, ferro chrome, and the emerging displays venture.

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Price Discovery Session

The Special Pre-Open Session on 30 April is expected to be the moment Vedanta's three-year-old demerger story finally meets the market's price-discovery machinery. According to analysts, the demerged price for Vedanta shares could be around ₹300 apiece. The price discovery session will take place from 9:15 to 9:45 am tomorrow, with normal trading starting from 10:00 AM at the ex-demerged price.

Analyst Expectations

Analysts have provided various estimates for the fair value of Vedanta shares and the demerged entities. Sunny Agrawal, Head of Fundamental Research at SBI Securities, expects the fair value for Vedanta shares to be ₹291. For the demerged entities, Agrawal estimates:

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These estimates suggest a higher total fair value of ₹885 for the metals company.

Outlook

Going ahead, analysts expect some pressure post-listing, as a few active funds may choose not to continue investing in certain businesses. Investing post-demerger carries slightly higher risk but also offers potentially higher returns from a medium- to long-term perspective. Two variables will determine whether the SOTP of ₹820-900 actually crystallizes for Vedanta - the final allocation of net debt across the five entities, and the speed of regulatory clearances for listing.

| Year-to-Date Performance | | --- | --- | | Current Year | 29% | | Last Year | 86% |

Vedanta shares have surged 29% on a year-to-date basis and 86% in the last year.