Vedanta Demerger Explained: What It Means for Shareholders

Vedanta Limited has taken a major step in reshaping its business. On December 16, 2025, the National Company Law Tribunal approved Vedanta’s long planned demerger, allowing the company to split its diverse businesses into separate, focused listed companies.

This move is not just a structural change. It has long term implications for valuation, governance, and how investors track Vedanta’s businesses. The market response has been positive, with Vedanta’s stock hitting an all time high of ₹580.45 today, reflecting strong investor confidence in the restructuring.

What exactly is the Vedanta demerger

Vedanta currently operates across several unrelated sectors like aluminium, oil and gas, power, and iron and steel under one listed company. While this offers scale, it also makes the company complex to value.

Through the demerger, Vedanta plans to separate these businesses into individual companies. Each business will operate independently, with its own management, financials, and growth strategy. The idea is to turn one large conglomerate into multiple pure play companies.

Why NCLT approval is important

For any major corporate restructuring in India, approval from the NCLT is mandatory. The December 16 order confirms that Vedanta’s demerger structure meets legal requirements under the Companies Act.

With this approval, Vedanta moves from planning to execution. Some regulatory and procedural steps are still pending, but the biggest legal hurdle is now cleared.

What companies will exist after the demerger

Once the demerger is implemented, Vedanta’s businesses will be split into the following listed entities:

• Vedanta Aluminium, which will focus entirely on aluminium manufacturing and value added aluminium products
• Vedanta Oil & Gas, which will house the group’s oil and gas exploration and production assets
• Vedanta Iron & Steel, combining iron ore mining and steel manufacturing operations
• Vedanta Power, which will own and operate the group’s power generation assets
• Vedanta Limited, which will continue as the parent company holding Hindustan Zinc and incubating new businesses

It is important to note that the power business demerger is still awaiting separate approval under a different NCLT process.

What happens to existing shareholders

From a shareholder point of view, the demerger is designed to be value neutral at the time of implementation.

If you own shares of Vedanta Limited, you will receive shares in each of the four new companies in proportion to your existing holding. This means your ownership continues, but it gets split across multiple companies instead of being concentrated in one.

Over time, however, the market may value each business differently based on its performance and growth prospects.

Why Vedanta is breaking itself up

The core reason behind the demerger is focus. Running very different businesses under one company often leads to capital allocation challenges. A cash generating business may end up funding a slower growing segment, even if investors would prefer otherwise.

Post demerger, each company will have:

• Its own leadership team making sector specific decisions
• Clear business strategy aligned to its industry cycle
• Independent capital raising and spending plans
• Direct accountability to shareholders

This structure allows faster decision making and sharper execution.

How each business stands on its own

Vedanta Aluminium will operate as a global scale aluminium producer with a strong focus on cost efficiency, value added products, and lower carbon aluminium. As aluminium demand grows with electrification and infrastructure, this business could benefit from long term structural trends.

Vedanta Oil & Gas will function as a dedicated upstream energy company. With India pushing for higher domestic energy production, this business is strategically important. Its performance will now be judged purely on production growth, costs, and cash flows.

Vedanta Iron & Steel will bring together iron ore and steel operations, creating a vertically integrated metals business. This setup can improve margins and also support future green steel initiatives as regulations and demand evolve.

Vedanta Power will focus on operating and optimising power generation assets. As India’s power demand rises, the business will have clearer visibility on returns without being clubbed with unrelated segments.

Vedanta Limited, after the demerger, becomes a cleaner holding company. It will mainly hold Hindustan Zinc and work on building future oriented businesses, giving investors exposure to both stability and optional growth.

The valuation angle: why markets usually like demergers

Conglomerates often trade at a discount because investors struggle to value very different businesses together. This is known as a conglomerate discount.

By separating into pure play companies, Vedanta allows the market to value each business on its own merits. Aluminium, oil and gas, and power all have different valuation benchmarks. Post demerger, strong businesses may command better valuations than they did earlier as part of the group.

This does not guarantee immediate gains, but it improves long term price discovery.

Final takeaway

• NCLT approval clears the biggest regulatory hurdle, moving the Vedanta demerger from planning to execution
• The demerger breaks a complex conglomerate into focused, pure play businesses, making each easier to understand and evaluate
• Existing shareholders retain ownership but gain direct exposure to aluminium, oil and gas, iron and steel, power, and future businesses 
• Independent management and capital allocation at each company level can lead to better decision making and sharper strategic focus
• Over time, separating businesses may reduce the conglomerate discount and allow stronger segments to be valued more fairly by the market
• The success of the demerger will ultimately depend on execution, sector cycles, and how effectively each new company delivers growth and returns

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