Vedanta Ltd., led by Anil Agrawal, recently traded ex-date for the demerger of four new companies. Following this, the mining and metal major disclosed the cost of acquisition for equity shares, providing investors with insight into the fair value of the existing and resulting entities. These disclosures suggest a notable undervaluation of Vedanta's shares in the current market.
Demerger Valuation Breakdown Revealed
According to an exchange filing, the existing Vedanta Ltd., primarily comprising its zinc and silver businesses, constitutes 52.34 percent of the total value. The remaining 47.66 percent is attributed to the other demerged companies, including Vedanta Aluminium Metal, Malco Energy, Vedanta Iron & Steel, and Talwandi Sabo Power.
Prior to trading ex-date on April 30, Vedanta shares closed at Rs 773.60 on April 29. Based on the company's stated valuation percentages, the fair value of the existing Vedanta entity should be approximately Rs 404.90 per share (52.35 percent of Rs 773.60).
Market Performance Post-Demerger
Post-demerger, Vedanta shares began trading at Rs 289.50. While the stock has seen a 17 percent increase from these initial levels, rising to Rs 338 by Thursday, it still appears to be around 20 percent below the fair value indicated in the company's filing. This discrepancy points to a potential undervaluation in the market.
Analyst Outlook and Q4 Earnings
Following the demerger and the release of Q4 earnings, BP Equities issued a report on Vedanta. The brokerage noted that Vedanta's continuing operations now form a more focused zinc-silver-copper business, with improved profitability visibility post-restructuring. Integrated operations, including captive mines and smelters, are expected to translate into higher metal realisations and enhanced earnings.
BP Equities anticipates supportive prices for silver, zinc, and copper due to demand from electrification, renewable energy, infrastructure, and electric vehicles. While the brokerage expects moderate growth for FY27-FY29, it cited a lower conglomerate discount and strong internal cash generation, maintaining a 'buy' rating with a target price of Rs 387.
For the quarter ending March 31, 2026, Vedanta reported an 89 percent year-on-year (YoY) surge in net profit to Rs 9,352 crore. Revenue also climbed 29 percent YoY to Rs 51,524 crore, with EBITDA increasing 59 percent YoY to Rs 18,447 crore. Margins improved significantly by 915 basis points, reaching 44 percent for the quarter.
Strategic Shift and Future Growth
Vedanta's demerger signifies a strategic shift from a diversified conglomerate to five focused, sector-leading businesses. Each new entity is expected to have a clear strategic direction, disciplined capital allocation, and enhanced growth visibility. Vedanta operates across critical sectors, including zinc, silver, copper, ferrochrome, and other essential minerals, supplying industries from infrastructure to electronics and defense. India accounts for 65 percent of its revenue, with the remainder generated from international operations and exports. The company's core business continues to be its 61 percent stake in Hindustan Zinc. Brokerages are awaiting further clarity on the stock's trajectory after the spin-off.