The Anil Agarwal-led conglomerate set May 1 as the record date for its demerger, which marks one of the biggest corporate restructurings in India’s metals and mining space. Since Friday (May 1) is a market holiday due to Maharashtra Day, Thursday (April 30) is the effective record date for the demerger. The shares will begin to trade excluding the value of the four demerged entities from April 30, appearing to significantly fall in value.
As a part of the demerger, each of Vedanta’s eligible shareholders will get one share of Vedanta Aluminium Metal (VAML), one share of Talwandi Sabo Power (TSPL), one share of Malco Energy and one share of Vedanta Iron and Steel, for every share held in Vedanta. However, the dates for the four new listings have not been disclosed yet.
Vedanta share price
The special pre-open session (SPOS) will run from 9:15 am to 9:45 am on Thursday to determine the price adjustment post demerger, and the regular trading in the stock will begin from 10 am.
Vedanta shares are expected to adjust for the demerger and trade in the range of Rs 300-325 per share after the special pre-open session, ICICI Direct said in a recent report. It is important to note that the firm’s estimate is indicative, as it awaits exact allocation of net debt across the resulting entities. The market price of Vedanta during the release of the report stood at Rs 720 per share. At the end of Wednesday’s session, it stood at Rs 773.60 apiece.
Sunny Agrawal, Head of Fundamental Research at SBI Securities, meanwhile said that the fair value of the residual base metal business and its holding in Hindustan Zinc will remain in the range of Rs 250-290 per share after the special pre-open session. “Due to adjustments in the active and passive funds, volatility is likely to be on the higher side for the next few days,” he said.
Also read | Vedanta demerger record date, how much money can you make and should you invest in buy 1, get 4 offer?The special pre-open session on April 30 is the moment Vedanta’s three-year-old demerger story finally meets the market’s price-discovery machinery, said Harshal Dasani, Business Head at INVasset PMS. According to the analyst, Vedanta shares excluding the demerged entities will likely open in the range of Rs 300-325 apiece, anchored largely by its 63.4% stake in Hindustan Zinc, copper, ferro chrome and the emerging displays venture.
“The remaining roughly Rs 400 of pre demerger value transfers into the four spun off entities i.e. aluminium, power, oil & gas, and iron & steel, that shareholders will hold as 1:1 entitlements pending listing over the next four to eight weeks. Aluminium is clearly the crown jewel: 2.8 MTPA capacity, expanding EBITDA per tonne, and tight global supply make it the most likely beneficiary of pure-play re-rating. Together with Hindustan Zinc, it should command the bulk of group value once the conglomerate discount unwinds,” according to Dasani.
That said, the analyst pointed out two variables that will determine whether the sum-of-the-parts valuation (SOTP) of Rs 820-900 actually crystallises; the final allocation of net debt across the five entities, and the speed of regulatory clearances for listing. “For long-term investors, this is a value-unlocking event, not a trading event. Position for the listings, not the open,” he said.
Vedanta market capitalisation
Post demerger, Nuvama Institutional Equities expects Vedanta to have a market capitalisation of nearly Rs 1.14 lakh crore. Notably, Vedanta at the end of the trading session on Wednesday had a market capitalisation of more than Rs 3 lakh crore.
“Based on our market-cap estimates, Vedanta and Vedanta Aluminium are expected to be classified as large caps, while Vedanta Power, Vedanta Oil & Gas, and Vedanta Steel & Iron Ore fall under small cap,” it added.
Vedanta shares are currently part of the Nifty Next 50 index. On the global front, it is part of the MSCI Emerging Markets Index as well as FTSE indices. Nuvama said Vedanta will continue to be part of Nifty Next 50, while the other demerged entities (Aluminium, Power, Oil & Gas, Steel) will be reflected as dummy constituents until listing. It added that Vedanta’s weight will be auto-adjusted on MSCI and FTSE indices.
Vedanta Q4 Results
Metals major Vedanta on Wednesday reported a 92% year-on-year (YoY) surge in consolidated net profit to Rs 6,698 crore for the March-ended quarter, while revenue from operations surged 47% YoY to Rs 24,609 crore during the quarter under review.
Vedanta also posted its best-ever earnings before interest, taxes, depreciation and amortisation (EBITDA) at Rs 18,447 crore, rising 59% YoY, while the EBITDA margin rose 44%, up by 915 bps YoY.
Also read | Vedanta demerger can create value in the long term
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