Vedanta Demerged Stocks Crash Up to 8%: Profit Booking Triggers Selloff

The recent demerger of the Vedanta Group has seen intense volatility in its newly listed entities. Following a massive 14-session winning streak, several Vedanta stocks faced a sharp correction on Friday as investors moved to lock in substantial gains.

Profit Booking Ends 14-Session Rally

After a period of relentless upward momentum, investors shifted gears on Friday, leading to a significant selloff across most demerged Vedanta entities. The primary driver behind this decline appears to be profit booking following a sharp rally that had seen these stocks climb for 14 consecutive sessions.

Among the losers, Vedanta Power saw the steepest decline, falling 8% to close at Rs 44.82 on the BSE. Vedanta Oil & Gas followed closely with a 7% drop to Rs 41.34. Vedanta Iron & Steel also snapped a highly impressive 13-session rally—during which it had surged 113%—to slip 4% to Rs 40.84. Interestingly, this rally was previously bolstered by a ₹102 crore bulk deal by Premji Invest, which acquired nearly 4.84 crore shares.

Vedanta Aluminium Metal: The Group's Resilient Crown Jewel

While most of the group's new entities struggled, Vedanta Aluminium Metal bucked the trend, gaining 2% to reach Rs 471. Analysts consistently view this vertical as the most promising segment of the restructured group.

Major brokerages have expressed strong bullishness on the stock:

  • Emkay: Initiated coverage with a 'Buy' rating and a target price of Rs 550, citing a structural earnings potential and a global aluminium deficit expected through CY28.
  • Citi: Named the stock its top pick in the Indian metals space with a target of Rs 560. Citi highlighted the company’s strengthening cost structure and its path toward a net cash position by FY28.

Sunny Agrawal, Head of Fundamental Research at SBI Securities, noted that the aluminium business offers the most compelling risk-reward profile due to its scalability and exposure to high-growth sectors like EVs and renewables.

Divergent Views on Power and Oil & Gas

The outlook for the remaining entities remains mixed. Vedanta Power, which operates over 4 GW of capacity across multiple states, faces a wide range of valuation estimates from brokerages. While Kotak Institutional Equities sees a value of Rs 60 per share, CLSA is more conservative, estimating it at approximately Rs 35.

In the energy sector, Vedanta Oil & Gas (which houses Cairn Oil & Gas) is aggressively pursuing a $5 billion investment plan to target production of 300,000 to 500,000 barrels per day. Despite the recent price dip, the company remains a major player in India’s private-sector upstream landscape.

Key Takeaways

  • Market Correction: The selloff in Vedanta Power, Oil & Gas, and Iron & Steel was largely driven by profit booking after a 14-day rally.
  • Aluminium Dominance: Vedanta Aluminium Metal remains the standout performer, with top brokerages like Citi and Emkay issuing 'Buy' ratings and targets up to Rs 560.
  • Valuation Gap: There is significant divergence in analyst opinions regarding Vedanta Power, with valuations ranging from Rs 35 to Rs 60 per share.