Vedanta shares tumble over 60% on demerger ex-date; here is why the fall isn’t what it seems

As the day progressed, the stock slipped further. When last seen, the scrip was trading at ₹280.85 on the NSE, against the discovered price of ₹289.50, down 3%.

On the BSE, shares were trading at ₹279.75, down 3.70% against the discovered price of ₹291.05.

On Wednesday, Vedanta shares closed at ₹773.25 apiece on the BSE.

Why the steep decline?

The steep decline, however, is largely technical in nature, reflecting the adjustment in the company’s stock price following the spin-off of its business verticals into separate listed entities.

Under the demerger scheme, Vedanta’s businesses are being split into five independent companies (including the existing one), and the parent stock now represents only the residual business value.

As part of the restructuring, shareholders of Vedanta will receive shares in the newly demerged entities, which include businesses such as aluminium, oil & gas, power, and steel.

According to the exchange filing, under the composite scheme of arrangement, shareholders of Vedanta will receive equity shares in four businesses in a 1:1 ratio.

The price discovered during the special session therefore factors in the value separation, rather than indicating any fundamental deterioration in the company’s operations.

Market participants typically track the combined value of all resulting entities post-listing to assess whether the demerger unlocks shareholder value.

According to analysts, such restructurings can lead to better valuation discovery and sharper business focus over the medium term.

Updates on demerged entities' listings

The metals and mining major will file with stock exchanges next week for listing approval of its demerged entities, with shares expected to list and commence trading by mid-June, a top official of the company said on Wednesday.

During an investor call on Q4 financial results, Vedanta Resources CEO Deshnee Naidoo said the demerger is now in its final stage.

"In the next week, we will be filing with the exchanges for listing approval. The shares of the resulting companies are expected to list and commence trading by mid-June," she said.

Vedanta Ltd is the Indian arm of Vedanta Resources.

What the Vedanta CFO said

Vedanta CFO Ajay Goel said the company's board had earlier approved the Vedanta demerger effective from May 1, and this will entail the creation of five independent sector-specific pure-play companies, allowing each company to chart out its own growth trajectory and attract investors.

"We are targeting listing and commencement of trading of these shares by the first quarter of FY'27," Goel said.

The demerger has been structured with precision on capital structure, aligning debt with the earning strength and growth stage of each resulting company, the CFO said.