Neutral Vedanta Ltd For Target Rs. 250 - Motilal Oswal Financial Services
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Proposes demerger into independent ‘pure play’ commodity companies
* VEDL announced its plan to demerge its existing business verticals into six independent ‘pure play’ companies. This move aims to unlock stakeholder value, attract strategic investment, improve competencies, and ensure transparency.
* The proposed demerger is anticipated to conclude, with separate units being listed, within the next 12-15months, subject to all the necessary approvals from shareholders, lenders, creditors, and regulatory authorities.
* The proposed demerger will be a simple vertical split, i.e., for every one share held in VEDL, the shareholders will receive one additional share of the newly listed five entities.
* VEDL will remain listed and will include the newly proposed semiconductor and display verticals while also functioning as the holding company for HZL.
Highlights from the analyst/institutional investors conference call
* The company hosted an analyst call to discuss the proposal in greater details. Following are the key takeaways:
The proposed demerger
* The existing company will be split into Vedanta Aluminum, Vedanta Oil and Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and VEDL. Shareholders will receive additional one share of each newly listed entity for one share held in VEDL.
* The demerger and listing of separate business units is expected to take 12-15 months, subject to all the necessary approvals from shareholders, lenders, creditors, and regulatory authorities.
* The newly listed demerged companies are expected to unlock stakeholder value, attract strategic investment, improve competencies, and ensure better customer alignment and transparency.
VEDL to be an incubator
* Post the demerger, VEDL will act as an incubator for the Vedanta Inc group, while also functioning as the holding company for HZL.
* VEDL will not have any cross holdings in the newly listed entities. This will ensure a transparent and non-cluttered capital allocation policy across zinc, semi-conductors, stainless steel, and technology verticals.
* VEDL’s proposed foray into the semiconductor and display vertical marks a significant transition for the company, evolving it from a pure commodities enterprise into a technology-focused company. * VEDL has finalized a technology partnership with Taiwanese firm Innolux for display manufacturing.
* VEDL will be run by Mr. Arun Misra (current CEO, HZL).
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SEBI Registration number is INH000000412
