Vedanta Shares Decline 4% Following Ex-Demerger Adjustment, Analysts Expect Potential Value Unlocking

Vedanta Ltd Shares Extend Losses Following Demerger Adjustment

Vedanta Ltd shares continued their downward trend on Thursday, falling as much as 4 percent in noon trade after adjusting sharply lower in a special pre-open session earlier in the day. The stock had opened at an adjusted price of Rs 289.5 following its ex-demerger price discovery. This marked a significant decline from the ex-demerger level, with the stock trading at Rs 279, down 3.63 percent.

The decline comes as investors react to the stock's transition into a residual entity after the separation of four key businesses – aluminium, power, oil & gas, and steel – into independent companies. The adjusted price now reflects only the value of the remaining business, primarily anchored by Hindustan Zinc.

Brokerages remain constructive on the restructuring, highlighting potential value unlocking over the medium term. Emkay Global noted that the demerger marks a "pure-play transition" and could lead to a re-rating as individual businesses attract dedicated investor interest and benefit from sharper capital allocation. The brokerage sees strong upside potential in the aluminium and power businesses post separation, as these segments contributed a significant portion of earnings.

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The demerger has been structured with balance sheet discipline, with debt aligned to the cash flows of individual businesses. Oil & gas and iron & steel entities are expected to be largely net-debt free, while leverage in other segments remains proportionate to earnings capacity. Nuvama Institutional Equities also noted that the company has "judiciously allocated debt" across entities, with the four demerged businesses expected to list by June. The brokerage has a target price of Rs 336 on the stock.

The demerger is expected to create five focused entities, enabling clearer valuation discovery and potentially improving investor participation across segments. The near-term stock movement reflects technical adjustments and some profit-taking after a sharp run-up ahead of the record date. However, brokerages believe the structural benefits of the split could play out over time.