In an exchange filing released on April 20, Vedanta announced that each of its 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. This marks one of the biggest corporate restructurings in India’s metals and mining space, allowing shareholders to hold a direct stake in distinct sector-specific firms rather than a diversified conglomerate structure.
While the record date for the demerger has been announced, the dates when the four new companies will be listed on stock exchanges BSE and NSE haven’t yet been disclosed. It is important to note that the shares of Vedanta currently represent the joint value of all the five companies. However, from May 1 onwards, the share price will represent the value of Vedanta excluding the four new companies.
Hence, the eligible shareholders of the company will see a portion of their money in the four new companies from the record date to their listing dates facing a discovery lag as they won’t be able to trade them, while the share price of the original Vedanta adjusts to the demerger and reduces in value.
While the exact dates for four listings is unknown so far, recent large demergers can give a hint.
Tata Motors CV
The shares of Tata Motors’ commercial vehicle business, which are now known as Tata Motors, were listed with a premium of more than 28% at Rs 335 apiece on the NSE on November 12 last year. This came less than a month after the shares of the company were demerged from the passenger vehicle segment, which traded excluding the CV unit from October 14 onwards.
Siemens Energy
Siemens Energy, the power transmission and distribution (T&D) business that was demerged from Siemens, listed on the NSE at Rs 2,840 per share on June 19 last year. This came 73 days after the record date.
ITC Hotels
ITC Hotels shares listed at a discount of nearly 31% on January 29, after the demerger of the firm from its parent organization ITC. The FMCG-major had fixed the demerger ratio at 1:10, which meant that shareholders holding 10 shares of ITC, as on January 6, 2025, would receive one share of ITC Hotels post the demerger. The listing of the demerged unit was done around 23 days after the record date.
Jio Financial Services
The shares of Jio Financial Services listed with a little over 1% premium on the stock exchanges on August 21, 2023, after the demerger from its parent firm and India’s most-valuable company Reliance Industries. The listing took place around 32 days after the record date.
Piramal Pharma
Piramal Pharma shares listed on stock exchanges on October 19, 2022 after demerging from Piramal Enterprises. The listing of the demerged entity took place 48 days after the record date to determine shareholders’ eligibility in September that year.
NMDC Steel
Shares of NMDC Steel listed on the stock exchanges BSE and NSE on February 20, 2023 after its 1:1 demerger from NMDC. The listing of the demerged entity came around four months after the record date of October 28, 2022.
ETMarkets.comWhen will Vedanta’s demerged entities list on BSE and NSE?
Nuvama Institutional Equities said that these examples indicate that listing timelines can range from 3 weeks to several months, depending on regulatory and operational factors. It added that in the case of Vedanta, each demerged entity will need to undergo separate approval processes, following which listings are expected to take place.
“As per Nuvama Alternative’s assessment, given the scale of the demerger, listings should ideally be completed within 4–8 weeks at most,” it concluded.
Vedanta has set the record date for its demerger on May 1. Since it is a market holiday on account of Maharashtra Day, April 30 will be the effective ex-date for the demerger, before which investors must buy the shares in order to be eligible for the corporate action, according to Nuvama.
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