Vedanta Demerger: Indian metal and mining giant Vedanta Ltd has made a key announcement regarding its demerger scheme. The company decided to keep its base metals business under the parent company after discussions with stakeholders and lenders.
On Monday, Vedanta Ltd’s shares saw a 0.3% rise. The intra-day high reached ₹484.50 per share, 1.5% higher than the previous close of ₹477.25. Later, the share price settled at ₹480.40. Vedanta Ltd is notable for its 9.81% dividend yield and a 259% high dividend payout ratio.
Vedanta Introduction
Vedanta Ltd, headquartered in Mumbai, is a leader in mining and natural resources. Active in metals, oil and gas, and power generation, the company was established as Sterlite Industries in the 1980s and rebranded after merging with Sesa Goa in 2015. Vedanta continues to strengthen its hold in the industry through its diverse businesses and global expansion.
- Market Cap: ₹ 1,81,931 Cr.
- Current Price: ₹ 465
- 52 Week High / Low: ₹ 527 / 250
- Stock P/E: 17.6
- Dividend Yield: 9.37 %
Why Vedanta Change Its Demerger Plan?
Initially, Vedanta Ltd planned to split its business into 5 parts, which included:
- Vedanta Aluminium Metal Ltd (VAML)
- Talwandi Sabo Power Limited (TSPL)
- Malco Energy Ltd (MEL)
- Vedanta Base Metals Ltd (VBML)
- Vedanta Iron and Steel Ltd (VISL)
However, the company has now decided to keep Vedanta Base Metals Ltd (VBML) under the parent company due to discussions and the current state of the base metals business. Despite this change, the demerger of the other four segments will continue as planned. Shareholders will receive equivalent shares in the new entities.
Vedanta Management Vision
Vedanta is confident about its production targets for FY’25. The company aims for an annual production of 11 million tons from its iron ore business. Hindustan Zinc, a subsidiary, produced 256,000 tons of mine metal and 262,000 tons of refined metal in the second quarter, showing steady progress.
Expansion in Aluminum Production
Vedanta is working on expanding its BALCO smelter, aiming to achieve an annual production of 3.1 million tons by FY’26, with 90% of production being value-added products. This strategy will strengthen Vedanta’s position in the metal and mining industry.
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Focus on Copper Project
Vedanta plans to restart its copper operations in Thoothukudi, Tamil Nadu, which is a crucial part of the base metals division. The demerger will not affect segments like aluminum, merchant power, oil and gas, and iron ore.
Vedanta Global Presence
Vedanta is active in various sectors, including:
- Metals: Aluminum, Copper, Zinc, Lead, and Iron Ore
- Oil and Gas: Exploration and Production
- Power Generation: Commercial Power Plants
The company also produces pig iron and metallurgical coke and provides shipping and port services. Vedanta has a strong presence in India and regions like Asia-Pacific, Europe, the Middle East, and Africa.
Vedanta Financial Performance:
For the quarter ending in September 2024, Vedanta reported operating revenue of ₹37,634 crore, a 3.3% decrease from ₹38,945 crore in Q2 FY24. However, the company’s net profit surged to ₹5,603 crore, recovering from a loss of ₹915 crore last year.
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Shareholding Pattern As of September 2024, Vedanta Ltd’s shareholding is as follows:
- Promoters: 56.38%
- Foreign Institutional Investors: 11.45%
- Domestic Institutional Investors: 16.29%
- Retail Investors: 15.64%
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