Vedanta shares steady despite potential demerger delay; Here are factors supporting the stock

Shares of Vedanta Ltd., the Anil Agarwal-owned mining conglomerate will be in focus on Thursday, July 3, after the company’s demerger process hit a potential roadblock at the National Company Law Tribunal (NCLT) on Wednesday.At the demerger hearing, India’s petroleum ministry said that it needs more time to share its observations over this demerger process.
In their respective responses submitted to the NCLT, market regulator Securities and Exchange Board of India (SEBI) said that it is verifying Vedanta’s compliance with SEBI norms for the demerger, while the National Stock Exchange (NSE) said that it has granted its No Objection Certificate (NOC) to the demerger plan.
The hearing at the NCLT will resume on August 20.A Vedanta spokesperson said that the conglomerate remains fully committed to its strategic reorganisation plan.

However, there are three factors that could cushion the stock price from any significant downside:Firstly, although potentially delayed, the demerger will unlock value for shareholders. Vedanta plans on demerging the current listed entity into five different ones and shareholders will be entitled to one share of every demerged entity for every one share they own of Vedanta Ltd.

At the current price, the stock is trading at a multiple of five times Enterprise Value to forward Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA).

Lastly, the US Dollar Index remaining below levels of 97, after having posted their worst first half of a calendar year since 1973 is another positive. A weaker greenback is generally positive for Metal stocks and Vedanta has most of the base metals within its operating gambit.

Vedanta’s promoters currently hold a 56.38% stake in the company, while close to 20 lakh small retail shareholders, or those with authorised share capital of ₹2 lakh, own stake in the company.

Shares of Vedanta are trading 0.5% lower on Thursday at ₹467.1.