Billionaire Anil Agarwal-backed Vedanta Ltd is closer to splitting up in the ratio of 1:6 as reports said that it has received major approval from its lenders. Vedanta is going to be demerged into 6 entities to unlock value. Vedanta is among the best-performing metal stocks in the sector. YTD, the stock zoomed by 79% on BSE.
Vedanta Split 1:6:
Vedanta's demerger is of a 1:6 ratio, where the company will be split up into six listed entities to unlock value. The demerger plan has been in full swing, which is why investors are further optimistic about Vedanta's shares.
As per a report of Money Control, a Vedanta official in a bondholder conference call said, "I am happy to inform you all that we have got 52 per cent plus the additional percentage that we need to reach 75 per cent. We have crossed that threshold as well. Most of the lenders have approved it."
The company now seeks NCLT approval and as per the official will apply for the same soon.
It was last year in September when Vedanta declared the creation of a demerger of metals, power, aluminium, and oil and gas businesses to unlock potential value. After the exercise, six independent verticals - Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and Vedanta Limited - will be created.
As part of the demerger plan, for every share of Vedanta, shareholders will receive one share of each of the five newly listed companies. After the demerger, the businesses of Hindustan Zinc as well as the electronics business will remain with Vedanta Limited.
Earlier, Agarwal said that FY25 is going to be a transformative year for the company on many fronts as it prioritizes disciplined growth, operational excellence and exploring opportunities along the value chain.
He also added that Vedanta's demerger is going to be completed by December 2024-end. Further, he reiterated Vedanta's goal of achieving Group EBITDA of $7.5 billion within two years and deleveraging its parent Vedanta Resources by $3 billion in the next 3 years.
In Q4FY24, the company posted consolidated revenue of Rs 34,937 crore, flat sequentially, while its EBITDA rose by 3% QoQ to Rs 8,969 crore with an EBITDA margin of around 30%. PAT excluding exceptional items in Q4FY24, came in at Rs 2,453 crore. Further, Vedanta recorded a decline of 10% in its net debt to Rs 56,338 crore.
Vedanta Share Price:
Last week, on Friday, Vedanta stock gained by 2.2% to Rs 460.45 apiece with a market cap of Rs 1,71,158.32 crore. The stock's 52-week high and low is at Rs 506.85 apiece and Rs 207.85 apiece respectively. In six months, the stock surged by 85%, while its yearly upside was about 66%.
Last month, Vedanta stock turned ex-dividend on May 24, for its dividend payout of Rs 11 per share.
Should you buy or sell Vedanta shares?
The highest target price on Vedanta is by Nuvama. In its research report, the brokerage raised Vedanta's FY25E/26E EBITDA by 18%/23% factoring in higher commodity prices and lower CoP (conformity of production) in aluminium. Also, the brokerage believes that Vedanta's has peaked out in FY24. Accordingly, Nuvama has raised Vedanta's target price to Rs 542.
However, Centrum recommends BUY on Vedanta stock but has lowered its target price to Rs 438 apiece. Also, brokerage CLSAA reiterated BUY on Vedanta stock but lowered the target price to Rs 430. Kotak Institutional Equities suggests selling for a fair value of Rs 320. Moreover, Motilal Oswal is Neutral with a target price of Rs 360.
Earlier this month, Vedanta announced that Cairn Oil & Gas is set to become Net Zero Carbon by 2030, by pioneering Environmental, Social, and Corporate Governance (ESG) leadership across the E&P value chain.
As part of a multi-pronged strategy, Cairn's focused ESG roadmap covers carbon emission reduction, leveraging renewable energy sources, leveraging nature-based carbon solutions and adopting innovations such as waste to energy, and carbon capture utilisation and storage (CCUS) among others. With this, Cairn has fast-tracked its vision of attaining Net Zero Carbon by 2030.
Vedanta Limited ("Vedanta"), a subsidiary of Vedanta Resources Limited, is one of the world's leading natural resources companies spanning India, South Africa, Namibia, Liberia, UAE, Saudi Arabia, Korea, Taiwan and Japan with significant operations in Oil & Gas, Zinc, Lead, Silver, Copper, Iron Ore, Steel, Nickel, Aluminium, Power & Glass Substrate and foray into electronics and display glass manufacturing.
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