The anticipated demerger of Vedanta Limited has stirred excitement on Dalal Street for over a year. Investors are keenly awaiting the timeline for this significant corporate restructuring. Billionaire Anil Agarwal’s diversified mining and metals conglomerate is expected to proceed with its plan to split into five distinct entities, targeting completion by September 2025.
Overview of Vedanta’s Demerger Plans
Vedanta’s restructuring will lead to the establishment of four independent companies, while the parent company will remain as the fifth entity. The new entities include:
- Vedanta Aluminium Metal
- Vedanta Power
- Vedanta Oil & Gas
- Vedanta Iron and Steel Limited
Each of these new companies will be publicly traded, offering existing shareholders one share in each new entity for every share they hold in Vedanta. The specific date for determining eligibility will be shared soon.
Financial Performance Highlights
According to Ajay Goel, Vedanta’s CFO, the company is on a positive trajectory to finalize the demerger by the end of the second quarter of the fiscal year 2026 (September 2025). As Vedanta gears up for this structural shift, it reported impressive figures for the fourth quarter of FY25:
- Achieved record consolidated revenue of ₹39,789 crore in Q4 FY25.
- Shareholder profit surged by 154% year-on-year, reaching ₹3,483 crore, compared to ₹1,549 crore in Q4 FY24.
- Consolidated EBITDA climbed by 30% to ₹11,618 crore, marking the highest margin in 12 quarters.
- Pre-capex free cash flow reached ₹7,814 crore, alongside a 34% year-on-year increase in cash equivalents.
- The profit after tax stood at ₹4,961 crore, representing a 2% rise from the previous quarter.
Analyst Insights: Bullish Outlook on Vedanta
The brokerage firm Nuvama maintains a positive outlook on Vedanta, affirming a ‘Buy’ rating. The report highlights promising prospects in the aluminium sector, ongoing debt reduction, and anticipated earnings growth over the forthcoming two years.
- Net debt (excluding Hindustan Zinc and including buyers’ credit) peaked during Q3 FY25, but has since decreased by ₹1,130 crore, totaling ₹68,400 crore by the end of Q4.
- Projections suggest this figure could decline to approximately ₹61,600 crore by the end of FY26.
Despite the optimistic outlook, Nuvama warns that regulatory approvals could potentially delay the demerger beyond the anticipated September 2025 date. The report states, "The demerger may face delays due to regulatory approvals currently in progress."
Future Growth in Aluminium Sector
Nuvama identifies Vedanta’s aluminium segment as a key growth driver for the future. The brokerage anticipates a 25% CAGR in aluminium EBITDA from FY25 to FY27, fueled by volume increases and cost reductions, which could position Vedanta among the top decile of global producers by FY28.
The report concludes, "We believe that the aluminium segment will emerge as the primary growth engine, and the company is on track to achieve a competitive cost structure by FY28."
Investors are encouraged to stay tuned for further updates on Vedanta’s demerger and its financial performance as the company navigates this transformative phase.
