Key facts
- Vedanta's demerger created five listed entities: Vedanta Aluminium, Vedanta Power, Vedanta Oil & Gas, Vedanta Iron & Steel, and a residual Vedanta.
- The combined market capitalization of these entities reached Rs 3.5 lakh crore upon listing.
- This valuation is 67% higher than the undivided company's average market cap of Rs 2.1 lakh crore over the past year.
- Vedanta Aluminium accounts for nearly Rs 2 lakh crore of the total valuation.
- The residual Vedanta entity is valued at approximately Rs 1.2 lakh crore.
Vedanta's recent demerger has resulted in a significant increase in its shareholders' value, with the combined market capitalization of the parent company and its four newly listed entities reaching Rs 3.5 lakh crore on their listing debut. This represents a 67% jump from the undivided company's one-year average market capitalization of Rs 2.1 lakh crore.
The demerger has separated Vedanta into five distinct listed entities: Vedanta Aluminium, Vedanta Power, Vedanta Oil & Gas, Vedanta Iron & Steel, and a residual Vedanta, which continues to hold the zinc, copper, and other base metal businesses.
Investors appear willing to pay a premium for pure-play exposure to specific sectors. Vedanta Aluminium is the dominant value driver, contributing nearly Rs 2 lakh crore, or over half of the total valuation. The residual Vedanta entity, which includes zinc and copper businesses, accounts for approximately Rs 1.2 lakh crore, representing about one-third of the overall valuation.
Analysis suggests that Vedanta's aluminium business is a strong performer, with its price-to-sales multiple aligning with sector peers. However, Vedanta Iron & Steel is trading at a discount compared to industry rivals like Tata Steel and JSW Steel. Vedanta Oil & Gas holds a mid-range valuation, positioned between ONGC and Oil India.
Despite the overall increase in market capitalization, on Monday, Vedanta's shares closed down 2% at Rs 302.6, with its demerged entities Vedanta Aluminium, Vedanta Power, Vedanta Oil & Gas, and Vedanta Iron & Steel also experiencing declines.