Vedanta Share Price Snaps Six-Day Fall Streak On Demerger Revision

Shares of Vedanta Ltd. snapped a falling streak to rise marginally in early trade on Monday after the company announced plans to retain its base metals unit with the parent on Friday, instead of listing it as a separate entity. The other four wholly-owned arms will take part in the demerger scheme that it had announced earlier.

Originally, Vedanta had proposed to demerge its aluminium, power, energy, base metals, and iron and steel units from itself.

However, the mining company's management has now decided to only demerge wholly owned subsidiaries Vedanta Aluminium Metal Ltd., Talwandi Sabo Power Ltd., Malco Energy Ltd., and Vedanta Iron and Steel Ltd.

Parent company Vedanta will retain Vedanta Base Metals Ltd. The decision is the result of the management's discussions and deliberations about the scheme with various stakeholders, including lenders.

They felt that a demerger of the company's base metals unit may be considered at a stage when that business has evolved and matured, to such extent that shareholders realise the full potential value of such a demerger.

The scrip rose as much as 1.52% to Rs 484.50 apiece. It pared gains to trade 0.37% higher at Rs 479 apiece, as of 09:55 a.m. This compares to a 0.74% advance in the NSE Nifty 50 index.

It has risen 85.55% on a year-to-date basis. The relative strength index was at 47.89.

Out of 15 analysts tracking the company, nine maintain a 'buy' rating, five recommend a 'hold,' and one suggests 'sell,' according to Bloomberg data. The average 12-month consensus price target implies an upside of 9.9%.