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Sytematix Research Report
Vedanta Ltd.'s announcement to de-merge its various business units into six independent companies could unlock potential value for shareholders but parent debt remains a concern.
Expected to be completed over the next 12-15 months, the demerger plan will be a clean vertical split where the shareholders will additionally receive one share of each of the newly listed companies for every share of Vedanta held.
The reorganisation will simplify Vedanta's corporate structure and provide investors with direct investment opportunities in dedicated pure-play companies.
However, the demerger is unlikely to resolve or change the debt positions at both Vedanta and the parent company Vedanta Resources Ltd.
Meanwhile, Hindustan Zinc Ltd.'s board also announced a comprehensive review of its corporate structure to unlock value.
We arrive at a post-demerger value of Rs 317/share (Rs 311 earlier) based on SOTP method and upgrade to 'Buy', implying an upside of 37% from current market price.
We value each of the resulting companies based on FY25E enterprise value/Ebitda.
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