Vedanta Stock Surges Over 8.5% After Demerger Adjustment

The stock of mining major Vedanta surged on the bourses on Monday to recover most of the losses incurred on Thursday after facing losses post-demerger adjustment.

The stock jumped over 8.5 percent today to reach up to Rs 294.80 compared to the previous close of Rs 271.60. It had opened higher by 2.3 percent at Rs 278 apiece.

Before the demerger adjustment, the stock was trading at around Rs 775.
After the special trading session for discovering the stock price of the demerged entity, the opening price of the stock was Rs 289.50. However, the stock declined to Rs 278 during trading hours on Thursday.

Vedanta is going ahead with its restructuring plans. Hence, the company will demerge its aluminium, power, oil & gas, and steel businesses into separate listed entities.

The demerger will divide the existing shareholders’ investment into the new separate entities.

Shareholders holding the stock as of the record date will receive one share each in the four new companies for every Vedanta share held.

The stocks of the spun-off companies will get listed on the bourses in the coming months.

To discover the valuation of the demerged entity, the National Stock Exchange conducted a special pre-open session between 9:15 am and 9:45 am on Thursday.

The stock of Vedanta is valued based on the group’s residual business after aluminium, power, oil & gas, and steel.

The residual business is now mostly led by Hindustan Zinc.

In the long run, experts say the demerger of Vedanta will help investors better value the businesses of the conglomerate while also leading to operational transparency.

The demerger would lead to improved capital allocation and better utilisation of funds. After the demerger, the oil & gas and iron & steel arms of the group are expected to get debt-free on a net basis.