Vedanta shares rise over 1% after Anil Agarwal says newly demerged firms could grow into $100 billion each

The company's proposed demerger will create four independent, natural resource-focused entities with management structures, capital frameworks, and strategic priorities.

The companies that will be created out of the demerger are Vedanta Aluminium, one of the world's largest producers of aluminium; Vedanta Oil & Gas, India's largest private-sector crude oil producer; Vedanta Power, one of India's largest generators of power; and Vedanta Iron and Steel—a company with a highly scalable ferrous portfolio.

Meanwhile, Vedanta Limited will include the world's second-largest integrated zinc producer and third-largest silver producer—in Hindustan Zinc (HZL).

In a letter to shareholders, Agarwal highlighted the need for pure-play businesses and how the proposed demerger will help Vedanta achieve this.

The mining tycoon launched the plan to overhaul the business in 2023 after failing to take Vedanta private in 2020. According to Vedanta’s demerger scheme, every Vedanta shareholder will receive one additional share in each of the four newly demerged companies on the completion of the demerger process.

Agarwal emphasised that stakeholders will directly benefit from the company's proposed move, while Vedanta's unique and irreplaceable assets, sector-leading position, and financial discipline will ensure a stronger growth trajectory and higher return.

The currently listed Vedanta Limited entity will also continue to be a powerhouse in its own right. Among other things, it will hold over 63.4% of Hindustan Zinc, the second largest integrated producer of zinc and the third largest producer of silver in the world, and Zinc International, which has even greater mineral resources than Hindustan Zinc.

"Additionally, Vedanta Limited will house our growing technology businesses and continue to act as an incubator for the group," the chairman added.

Vedanta share price trend

Shares of Vedanta have rallied 65% in the past 12 months. In comparison, the benchmark NIFTY50 index has gained 2% during the window.