Key facts
- Vedanta's demerger created four new companies, with Vedanta Aluminium debuting as the largest at Rs 2.06 lakh crore.
- Shares of Vedanta Aluminium, Vedanta Oil & Gas, and Vedanta Power fell up to 5% on their second day of trading.
- Analysts favor Vedanta Aluminium due to its scale, integrated operations, strong cash generation, and exposure to long-term demand drivers.
- Vedanta Aluminium plans to double its production capacity to 60 lakh tonnes per annum with significant investment by FY28.
- Vedanta Power aims for significant capacity expansion but faces more volatile merchant power tariffs and fewer growth triggers than aluminium.
Shares of Vedanta's newly demerged entities, including Vedanta Aluminium, Vedanta Oil & Gas, and Vedanta Power, experienced declines of up to 5% on Tuesday, marking their second day of trading after a significant corporate restructuring in India's metals and mining sector.
Vedanta Aluminium debuted as the largest entity with a market capitalization of approximately Rs 2.06 lakh crore. Analysts, including Kaustubh Rane of Ashika Capital, favor Vedanta Aluminium as the most compelling investment opportunity due to its scale, integrated operations, strong cash generation, and exposure to long-term structural demand drivers. The company plans to double its aluminium production capacity to 60 lakh tonnes per annum and has outlined investments of Rs 13,226 crore for expansion by FY28.
ICICI Securities views the aluminium business as the group's 'crown jewel,' citing potential supply deficits and improved coal integration as upside risks. Sunny Agrawal of SBI Securities estimates Vedanta Oil & Gas, which houses Cairn Oil & Gas, has a fair value of Rs 42 per share. Brokerages are divided on Vedanta Power's valuation, with estimates ranging from Rs 35 to Rs 60 per share. While Vedanta Power has over 4 GW of installed capacity and plans for expansion, analysts suggest it offers fewer growth triggers compared to the aluminium business.