Vedanta Demerged Entities Slump 5%: Which Stock Offers Best Value?

Following one of India's largest corporate restructurings in the metals and mining sector, the newly listed Vedanta entities faced a significant sell-off on their second day of trading. As shares of Vedanta Aluminium, Oil & Gas, and Power hit lower circuits, investors are left evaluating which of these specialized businesses holds the most promise for long-term wealth creation.

Market Reaction: The Post-Listing Slump

On the second day of trading, the market responded with volatility as the dust settled from the landmark demerger. Vedanta Aluminium saw its shares hit the 5% lower circuit limit, closing at Rs 475.65. Similarly, Vedanta Oil & Gas also touched its 5% lower circuit, trading at Rs 35.20. While Vedanta Power also opened 5% lower, it managed to recover some ground during the session, trading only marginally below its opening price.

Currently, all four newly listed stocks are placed in the Trade-to-Trade (T2T) segment, meaning every transaction requires compulsory delivery, which often limits immediate speculative volatility.

Vedanta Aluminium: The Group’s "Crown Jewel"

Despite the immediate price correction, most analysts view Vedanta Aluminium as the standout performer in the demerged universe. With a massive market capitalization of approximately Rs 2.06 lakh crore, it is the heavyweight of the group.

ICICI Securities has labeled the aluminium business as the group's "crown jewel," citing potential supply deficits driven by global geopolitical tensions. Furthermore, the company has aggressive expansion plans, aiming to double its production capacity to 60 lakh tonnes per annum. To achieve this, Vedanta has outlined capital expenditures of Rs 13,226 crore through FY28. Kaustubh Rane of Ashika Capital also highlighted the company's strong cash generation and integrated operations as compelling reasons for investment.

Assessing Vedanta Oil & Gas and Vedanta Power

While aluminium leads on growth, the other two entities present different value propositions:

Vedanta Oil & Gas: Housing the Cairn Oil & Gas assets, this entity is India's leading private-sector upstream player. The company is targeting a production capacity of 300,000 to 500,000 barrels per day through a planned $5 billion investment. Analysts like Sunny Agrawal of SBI Securities suggest a fair value of Rs 42 per share, noting the significant growth in reserves and natural gas portfolios.

Vedanta Power: This segment, which manages over 4 GW of installed capacity across multiple states, offers more stability than high-octane growth. With a goal to become one of India's top three private thermal power producers by FY33, it provides revenue visibility through long-term power purchase agreements. However, brokerage views remain divided, with valuations ranging from Rs 35 (CLSA) to Rs 60 (Kotak Institutional Equities). Experts suggest this entity may better suit income-oriented investors rather than growth seekers.

Key Takeaways