Vedanta Ltd., one of India’s leading private-sector natural resources conglomerates, has secured overwhelming support from shareholders and creditors for its planned demerger, which aims to create five independent entities focusing on specific sectors. This transformative move reflects the company’s strategy to increase operational efficiency and leverage growth opportunities within its diverse business portfolio.
Under the proposed restructuring, which is set to be finalized by the first quarter of FY 2026, Vedanta plans to split its operations across aluminium, power generation, oil and gas, and iron ore. According to reports, these changes have been well-received, with 99.99% of shareholders, 99.59% of secured creditors, and 99.95% of unsecured creditors voting to approve the plans during recent meetings held on February 18, 2025. The formal regulatory filing confirming these approvals was made public on February 20, 2025.
This move not only positions Vedanta for increased agility but also enhances its ability to attract specialized investors and grow independently within these sector-focused entities. Each demerged company is expected to appeal to distinct investor groups, thereby facilitating more targeted investments and collaborations. The newly formed companies include Vedanta Aluminium, which is poised to remain one of the largest producers globally, and Vedanta Oil & Gas, maintaining its status as India’s predominant private sector oil producer.
The rationale behind the demerger is largely to streamline operations and allow management greater focus within specific sectors, which can lead to improved performance metrics and resource allocations. Analysts forecast this could also lead to higher valuations for the separate entities—possibly moving from current enterprise value multiples of under 5x to higher multiples of 6x to 7x post-demerger.
Current financial statistics are telling; during the December 2024 quarter, Vedanta reported revenue from operations amounting to ₹385.3 billion, marking a 10% year-on-year growth from ₹349.7 billion. Its net profit also surged by 76%, jumping to ₹35.5 billion from the previous ₹20.1 billion. The company’s consolidated EBITDA showed significant growth, increasing by 30% year-on-year to ₹112.8 billion, thereby improving margins to 34%.
This positive financial trend is backed by the strategic optimization of resources, contributing to its solid performance. Over the financial year 2024, Vedanta reported total revenues of ₹1,437 billion, indicative of the company’s resilience through market volatility.
One of the more significant highlights of Vedanta's recent developments is its recent victory at the Kauhari Diamond Block there. The Madhya Pradesh Department of Geology and Mining had hosted e-auctions for the diamond block, and Vedanta emerged as the highest bidder, which could position it advantageously within high-value mining assets going forward.
Analysts expect the demand for primary aluminum and zinc to continue climbing with infrastructure developments and the growing industries of electric vehicles and renewable energy. Market conditions are also favorable, with India’s projected demand outpacing global growth, allowing Vedanta to capitalize on opportunities within these burgeoning sectors.
For shareholders, the demerger signifies not just structural changes but also tangible benefits, with every holder of Vedanta shares set to receive equal shares of the new companies being formed. This allows for greater flexibility and the potential for significant growth within sector-specific investments. Each independent entity is envisioned to pursue growth strategies suited to their markets, positioning Vedanta’s shareholders to benefit from various growth trajectories.
The company has also indicated ambitious plans for capital expenditure, committing $8 billion over the coming years. This investment is expected to boost production capabilities particularly within aluminum, as Vedanta aims to increase aluminum production capacity to 3.1 million tons annually, emphasizing value-added products and alloys.
While Vedanta prepares for the final steps of the demerger, regulatory approvals are still needed for its full execution. Observers and investors alike have expressed optimism for the company’s future, citing the potential for improved valuations and operational synergies enhanced through this strategic realignment.
With the corporate reshuffle signaling significant changes, the broader ramifications for the market and investor behavior will be closely monitored. If executed according to plan, the Vedanta demerger could potentially redefine its corporate identity, creating leaner, more specialized operations capable of delivering precise value to stakeholders.