"Vedanta's Bold Restructuring: The 2026 Five-Way Demerger Set to Unlock Sectoral Value"

"Vedanta's Bold Restructuring: The 2026 Five-Way Demerger Set to Unlock Sectoral Value"

 

Vedanta is in the process of demerging its business into five independent, publicly listed companies, with the existing Vedanta Limited as the parent entity. The goal is to unlock value and allow each business vertical to operate with a sharper focus.  Vedanta Ltd plans to split into five focused listed companies through a vertical demerger, targeted to be completed by March 31, 2026 subject to final NCLT and government approvals, and shareholders will receive 1 share of each resulting company for every 1 share of Vedanta held.​

The five resulting companies are:

• Vedanta Aluminium (Vedanta Aluminium Metal Ltd.)
• Vedanta Oil & Gas (Talwandi Sabo Power Ltd. will be renamed Vedanta Oil & Gas)
• Vedanta Power (Malco Energy Ltd. will be renamed Vedanta Power Company)
• Vedanta Iron & Steel (Vedanta Iron and Steel Ltd.)
• Vedanta Limited, which will retain its interests in Hindustan Zinc and act as an incubator for new ventures like semiconductors and display glass. 

Key Details

• Purpose: The demerger aims to simplify the corporate structure, allow for independent management and capital allocation for each vertical, and attract a broader range of investors.
• Shareholder Impact: For every one share of the current Vedanta Limited that shareholders own, they will receive one additional share in each of the five newly listed companies.
• Status: Vedanta’s board approved the demerger plan in 2023, and shareholder and creditor approvals were subsequently obtained with an overwhelming majority voting in favour. The company has extended the deadline for completing the demerger multiple times, with the current target pushed from September 30, 2025 to March 31, 2026 due to pending clearances from the NCLT Mumbai Bench and certain government authorities. SEBI has cleared the modified/revised demerger scheme and its affidavit has been taken on record in NCLT, which has reserved its order after final hearings in November 2025, making regulatory approval the key remaining step.​

Demerger mechanics and share entitlement

The demerger is designed as a “simple vertical split” under Sections 230‑232 of the Companies Act, where existing Vedanta shareholders will receive proportionate shares in each resulting company without any cash outlay. For every 1 share of Vedanta Ltd currently held, investors will be allotted 1 additional share in each of the five demerged entities, effectively giving them a portfolio of five separate listed stocks in addition to their original Vedanta holding. The exact record date and listing dates for the new companies will be fixed only after NCLT approval and completion of statutory and stock‑exchange processes, but management has indicated an internal target to operationalise the structure in FY26, aligned with the March 2026 outer deadline.​

Strategic rationale of the split

Vedanta is currently a diversified natural‑resources conglomerate spanning aluminium, zinc, copper, oil and gas, iron ore, steel, and power, which often trades at a “conglomerate discount” versus the sum of its parts. By placing each vertical into its own listed company with independent management, capital allocation and sector‑specific strategy, the group expects better valuation discovery, sharper strategic focus, and easier entry for strategic partners or investors in specific businesses. The move is also intended to ring‑fence financial risks, improve transparency in leverage and cash flows at each business, and potentially facilitate asset monetisation, JV tie‑ups or even partial exits in selected verticals over time.​

Business profiles of the five companies

Vedanta Aluminium will house the group’s large aluminium operations, including smelting, refining, and captive power, as well as the BALCO stake, and is expected to be the largest value contributor because aluminium already accounts for more than half of Vedanta’s consolidated revenues and EBITDA. Vedanta Oil & Gas will be centred on the Cairn Oil & Gas upstream portfolio, with producing and development assets and a stated ambition to eventually contribute a substantial share of India’s oil and gas output through expansion of reserves and resources. Vedanta Steel & Ferrous Materials will combine iron ore mining assets in India and Liberia with steel operations (ESL Steel) and aims to more than double iron ore production, while Vedanta Power will consolidate coal‑based and renewable power assets, and Vedanta Base Metals/Vedanta Ltd will focus on copper, zinc‑international and other base metals.​

Impact on shareholders and valuation

For existing investors, the key mechanical impact is that one Vedanta share will turn into a basket of five sectoral shares, allowing them to choose whether to hold, add or exit specific commodity exposures over time. Brokerage and research commentary broadly expects that standalone pure‑play entities, especially Aluminium and Oil & Gas, could attract higher valuation multiples compared with the current diversified structure, though the benefits may be moderated by group‑level leverage, cyclical earnings and corporate‑governance perception. In the near term, there can be volatility around the record date, listing of new entities and clarity on capital structure of each company (debt allocation, dividends, capex plans), so investors typically track detailed scheme documents and management commentary before taking positional calls.​

Key risks, constraints and open issues

The demerger is still contingent on the final order of the NCLT Mumbai Bench and completion of all statutory and regulatory approvals, which is why the company has repeatedly extended the deadline and kept March 31, 2026 as the current outer limit. There are also structural constraints such as the Government of India’s stake in Hindustan Zinc, which has historically limited full separation of that business, and operational challenges in assets like Sterlite Copper, where the Tuticorin smelter remains shut. Macro‑risks such as commodity price volatility, high consolidated debt, and potential funding needs of the promoter Vedanta Resources could also influence post‑demerger performance and market perception of each listed entity.