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Vedanta Stock Soars: Demerger Sparks 30% Rally
27 May
Summary
- Vedanta shares surged 30% in the first month post-demerger.
- Four demerged entities will trade separately by next month.
- Company projects $10 billion combined EBITDA and $20 billion capex.
Vedanta's stock price has seen a significant upswing, with shares climbing nearly 30% in the month since its demerger, achieving its strongest performance since April 2024. The conglomerate's chairman, Anil Agarwal, confirmed that the four demerged entities – Vedanta Aluminum Metal Ltd., Talwandi Sabo Power Ltd. (to be renamed Vedanta Power Ltd.), Malco Energy Ltd. (to be renamed Vedanta Oil & Gas Ltd.), and Vedanta Iron and Steel Ltd. – will commence trading independently by next month. These companies have been trading on a demerger-adjusted basis since May 1.
Agarwal expressed confidence in the demerged entities, stating they will each have robust management teams suited for India's natural resources sector. He projected a combined EBITDA of $10 billion across all entities in the coming years, alongside a substantial future capital expenditure of $20 billion. This investment aims to more than double production capacity.
Furthermore, Vedanta remains open to acquiring Public Sector Undertaking (PSU) units offered through government divestment. The company has a proven track record of revitalizing PSUs, citing BALCO and Hindustan Zinc Ltd. as examples. Agarwal reiterated his optimistic outlook on copper, aluminum, and oil and gas, deeming them critical sectors. He also highlighted the potential for Vedanta to become a leading producer of arms and ammunition if related facilities are modernized and privatized.
