5 New Shares On 1 Soon: Vedanta Ltd Gains Over 6% In 5 Sessions; Big Demerger Update, Buy The Low Metal Stock?

Metal giant Vedanta Ltd has witnessed favourable buying momentum in 5 consecutive sessions, pushing the share price up by more than 6% on BSE. Notably, Vedanta is gearing up for its demerger into 6 six listed entities, while entering into an agreement of $530 million to service its financial indebtedness. Majority of brokerages like Vedanta shares.

Vedanta Ltd Share Price:

Vedanta stock ended at Rs 413 apiece, up by 0.22% after market hours of April 22, with m-cap at Rs 1,61,499.03 crore. The stock price has gained by at least 6.3% in five consecutive sessions on BSE. The stock's 52-week high and low is at Rs 527 apiece and Rs 362.20 apiece respectively. Its price-to-equity ratio is at 9.71x, which is low. Meanwhile, the return on equity is around 22.07%.

Vedanta Resources Ltd. Debt:

The promoters of Vedanta Ltd such as Vedanta Resources Limited, Twin Star Holdings Limited, and Welter Trading Limited, have entered into a facility agreement.

This agreement was signed on April 17, to service the financial indebtedness of the VRL Group transaction expenses contemplated under the finance documents and for general corporate purposes of the borrower by the terms contained under the facility agreement.

The agreement is to the tune of $530 million, and it will have no direct impact on Vedanta, as per the main filing. The borrower is Twin Star Holdings, which holds a 40.02% stake in Vedanta, with VRL and Welter Trading as the guarantor. The lenders are notable global banks like Barclays Bank PLC, First Abu Dhabi Bank PJSC, Mashreqbank PSC, Standard Chartered Bank (Mauritius), Deutsche Bank AG, Singapore Branch, and Standard Chartered Bank GIFT City.

Vedanta Demerger Update:

Amidst the prices of aluminium, zinc and copper erasing their gains of 2024, billionaire Anil Agarwal believes that a simpler structure for the sprawling group and growing demand for critical minerals will add to the allure of his companies even as the specter of a global recession looms, as per Bloomberg report.

A Bloomberg Intelligence analyst Mary Ellen Olson also said, the will allow the group to list each of its key businesses: aluminum, oil & gas, power, iron & steel, along with the publicly traded core company Vedanta. The demerger could provide new funding sources and increase financial transparency across the group.

The demerger of Vedanta includes 5 new listings of its business alongside its own. Vedanta will be split into metals, power, aluminium, and oil and gas businesses to unlock potential value. After the exercise, six independent verticals - Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and Vedanta Limited - will be created.

Under the demerger agreement, every eligible shareholder of Vedanta will get one share each in the five newly listed companies, against their 1 existing share in Vedanta.

The demerger is expected to cut Vedanta's promoter group's debt of $11 billion.

Buy Vedanta Stock?

The consensus recommendation from 15 analysts for Vedanta Ltd. is BUY, as per Trendlyne data. The company's EPS is expected to grow by 211.1% in FY25. The average 1-year target price is at Rs 524.87, signalling potential 27% upside ahead.

Meanwhile, currently, brokerages like ICICI Securities has suggested BUY with highest target of Rs 605, followed by Emkay Global and IIFL Securities with target price of Rs 575 and Rs 570 on Vedanta. However, brokerage Geojit recommended HOLD Vedanta stock for a target of Rs 496. Lastly, Kotak Institutional Equities has suggested REDUCE on Vedanta stock for a target price of Rs 465.

Disclaimer

The write-up is just for information purposes, and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on article mentioned. Neither, the author nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.