Vedanta demerger decks cleared after Mumbai NCLT approves plan; Stock surges

Shares of Vedanta Ltd. recovered from the day's low after the Mumbai bench of the National Company Law Tribunal (NCLT) approved the demerger plan of the company, that was long in the works.

Vedanta had announced the demerger of the currently listed entity into six different entities, back in September 2023.

Initially, Vedanta had proposed the demerger of five key undertakings—Vedanta Aluminium Metal Ltd (VAML), Talwandi Sabo Power Limited (TSPL), Malco Energy Ltd (MEL), Vedanta Base Metals Ltd (VBML), and Vedanta Iron and Steel Ltd (VISL)—into separate entities to enhance value unlocking.

A few months later, the company had announced that it will not pursue the demerger for its Base Metals unit. Shareholders of Vedanta will be entitled to one share each of every demerged entity for every one share that they own of the currently listed entity as on the record date, which is yet to be announced.

Rakesh Arora of Go India Advisors told CNBC-TV18 on Tuesday that the move is something that the street had been waiting for many quarters. However, he does not see too much value unlocking to be possible from this demerger.

He also expects Vedanta to sell some of the non-core assets and the demerger to have a "neutral" to "positive" impact.

Sanjay Asher of Crawford Bayley & Co. said that as of now, it is a green signal for the demerger, unless there is an appeal is filed against the NCLT order. In case the order is challenged, it will be fought at the National Company Law Appellate Tribunal (NCLAT).

At the end of the September quarter, Vedanta had a 20.21 lakh small retail shareholders, or those who have an authorized share capital of up to ₹2 lakh. These small retail shareholders had a 11.41% stake in the company.

Shares of Vedanta have surged to the highs of the day, currently trading 3.4% higher at ₹568.