5 Things Vedanta Shareholders Should Know as Vedanta Gets Demerger Approval for 5 Separate Entities

India is in the midst of a demerger boom, with big names breaking up to build bigger futures.

As conglomerates realign their structures to capitalise on niche opportunities, 2025 seems to be the year of strategic separations, setting the stage for a new era of growth and innovation.

From HUL's ice cream spin-off to ITC's hotel split and Tata Motors' strategic realignment, 2025 is shaping up to be the year of corporate shake-ups. The goal? Unlock hidden value, sharpen focus, and accelerate growth.

Now, Vedanta has entered the spotlight. It's gearing up to explore a similar path.

About Vedanta

Vedanta is a global natural resources company with a diverse portfolio and a significant presence in India.

It's one of the largest producers of minerals in India with operations spanning multiple sectors, including aluminum, copper, zinc, lead, and iron ore, along with oil and gas exploration and commercial power generation.

Additionally, Vedanta is engaged in the production of pig iron and metallurgical coke, as well as providing shipping and port services.

With a strong footprint in India, the company also operates across key global regions, including the US, Asia-Pacific, Europe, the Middle East, and Africa.

Vedanta Demerger

#1 Demerger Approval

On 18 February 2025, Vedanta held meetings with its shareholders, secured creditors, and unsecured creditors, all of whom overwhelmingly supported the restructuring plan.

The official regulatory filing on 20th February confirmed the approvals, marking a key milestone in Vedanta's transformational journey.

While the plan is set in motion, it remains subject to statutory, government, and regulatory approvals. However, if executed successfully, this demerger could pave the way for a more agile and growth-driven Vedanta Group in the years ahead.

#2 Demerger Plan

In 2023, the Anil Agarwal-led Vedanta Ltd unveiled its ambitious demerger plan, aiming to restructure the company into five independent, sector-focused entities.

The proposed split will see Vedanta Aluminium Metal Ltd, Talwandi Sabo Power Ltd, Malco Energy Ltd, and Vedanta Iron and Steel Ltd operate as standalone businesses, each specializing in aluminum, iron ore, copper, oil and gas, and power generation, respectively.

The plan, designed to create globally scaled entities with a sharper strategic focus, received overwhelming support, with 99.99% of shareholders, 99.59% of secured creditors, and 99.95% of unsecured creditors voting in favour, as per the company's stock exchange filing.

The demerger process is expected to be completed in the first quarter of 2025.

#3 What Are the Resulting Companies?

Vedanta's demerger will give rise to five distinct, sector-focused entities:

• Vedanta Aluminium - Among the world's largest aluminum producers.
• Vedanta Oil & Gas - India's largest private-sector crude oil producer.
• Vedanta Power - One of the country's leading power producers.
• Vedanta Iron and Steel - A key player in the ferrous products industry.
• Vedanta Limited - Will continue as the parent entity, acting as an incubator for emerging businesses, including the group's technology ventures.

This restructuring aims to allow investors to hold separate stakes in each business, offering exposure to specific industries with distinct growth potential. By enabling targeted investments, the plan caters to diverse investor strategies and risk appetites.

Over time, each entity is expected to attract a unique set of investors, strategic partners, and financial stakeholders, fostering deeper collaboration and unlocking sector-specific expansion opportunities without binding the entire organization to a singular trajectory.

#4 How Will the Demerger Benefit Vedanta?

Analysts suggest that the demerger will sharpen Vedanta's operational focus by allowing management to concentrate on specific business verticals, thereby improving efficiency and resource allocation.

By creating standalone units, the restructuring is also expected to unlock hidden value, enabling better access to equity and debt markets tailored to each segment's financial needs.

Currently, Vedanta operates a highly diversified portfolio spanning metals, mining, oil and gas, and power generation.

The demerger will refine this structure, ensuring each business is independently positioned to scale. Notably, Vedanta Ltd will continue housing its base metals operations while overseeing the transition.

#5 What Does This Mean for Shareholders?

For Vedanta's shareholders, the demerger marks a pivotal shift. Investors will receive one share in each of the four newly formed companies for every Vedanta share they hold, effectively giving them direct exposure to all five specialized businesses without any additional cost.

This move not only enhances portfolio diversification but also provides shareholders with flexibility to focus on specific industries within the Vedanta ecosystem.

With each new entity operating independently, shareholders can benefit from sector-driven growth while retaining their stake in the larger group.

Over time, this structural change is expected to generate greater investor interest, potentially driving better valuation and liquidity across Vedanta's businesses.

A Close Look at the Financials

For December 2024 quarter, Vedanta reported a revenue from operations of Rs 385.3 billion (bn), 10% YoY high, compared to Rs 349.7 bn a year back.

Meanwhile the net profit rose 76% YoY to Rs 35.5 bn, up from Rs 20.1 bn a year back.

The consolidated EBITDA during the third quarter rose 30% YoY to Rs 112.8 bn. Margins, meanwhile, improved to 34%.Vedanta reported its highest-ever third-quarter EBITDA, driven by a strategic focus on cost optimization and production ramp-up across its key businesses.

This approach has enabled the company to sustain its strong performance and deliver consistent outperformance.

For the FY24 the company reported revenue at Rs 1,437,080 million (m), down 2.4% YoY. Meanwhile it reported degrowth in net profit to Rs 75,370 m.

Vedanta's Financial Snapshot (FY22-24)

(Rs m, Consolidated)	FY20	FY21	FY22	FY23	FY24
Revenue	844,470	880,210	1,327,320	1,473,080	1,437,270
Revenue Growth (%)	(-8.3)	4.2	50.8	11	(-2.4)
Net Profit	(-47,430)	150,330	237,090	145,060	75,370
Net Profit Margin (%)	(-5.6)	17.1	17.9	9.8	5.2
Return on Equity (%)	(-8.7)	24.2	36.3	37	24.7
Return on Capital Employed (%)	(-3.6)	22.4	37.2	32	36.8

Source: Equitymaster

Between 2020 to 2024, Vedanta's net sales have grown 9.3%, while the bottomline has turned profitable.

The average RoE and RoCE for the past five-year period have stood at 24.4% and 25%, respectively.

Recent Development

• Diamond Auction Win

  Vedanta has secured the status of the preferred bidder for the Kauhari Diamond Block in Madhya Pradesh. The state's Department of Geology and Mining had invited tenders for the block through an e-auction for a composite licence.

  Vedanta participated in the live bidding process and was declared the highest bidder.

  The mine spans 643.4169 hectares and is currently at the G4 exploration stage. This phase, known as reconnaissance, involves large-scale identification of potential mineral deposits through grassroots exploration, systematic geological mapping, and airborne geophysical surveys.

  With this development, Vedanta strengthens its footprint in India's natural resource sector, aligning with its strategy to expand into high-value mining assets.

What Next?

Vedanta has outlined an ambitious expansion plan, committing US$ 8 billion (bn) in growth capital expenditure over the coming years.

Of this, US$ 1 bn will be allocated over the next five years to boost copper and cobalt production. The company is also aiming to scale its aluminium production capacity to 3.1 million tons per year, with 90% consisting of value-added products and alloys.

Additionally, Vedanta plans to complete the initialization phase by Q1 FY26.

As part of its backward integration strategy, the company is targeting first ore production from the Kurloi and Radhikapur coal mines in Q1 FY26, ensuring a steady raw material supply to support its aluminium operations.

Conclusion

The demand for primary aluminum and zinc is estimated to have grown by 16-17%, with strong momentum expected to continue in the coming years, driven by thriving infrastructure, manufacturing, automotive, and EV/renewable energy sectors.

While global demand for these minerals is projected to rise by 2-3% on average, India's demand is expected to grow at a significantly higher rate of 5-9%.

Additionally, with advancements in technology and increased investments, the semiconductor industry is poised for exponential growth, estimated at around 9% between 2024 and 2027.

The ongoing infrastructure development across India further strengthens industry prospects, positioning Vedanta to capitalise on these emerging opportunities.

Investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

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