Vedanta to carve out real estate, create sixth listed company
Mumbai: Vedanta Ltd said on Thursday that it will create a sixth group company by splitting off its newly formed real estate company as a separate entity. The company, led by billionaire Anil Agarwal, made the announcement just weeks after completing a lengthy restructuring into five separately listed companies.
“This is another exciting announcement from Vedanta. After the recent success of the five-way demerger, which created ‘pure play’ assets in oil and gas, aluminium, power and steel, we plan to demerger the excess real estate assets into a standalone ‘pure play’ company to unlock significant value for shareholders,” Agarwal said in a statement.
Shareholders of Vedanta Ltd will receive shares in Vedanta Property Platforms Ltd for every 20 shares in Vedanta Ltd. Shares of Vedanta Ltd closed 1.17% higher on Wednesday. ₹The benchmark stood at 267.6, compared with a 0.35% rise in the Sensex.
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Vedanta plans to separate its real estate assets into a newly formed company called Vedanta Property Platforms Ltd, with the aim of delivering significant value to shareholders.
The demerger aims to create a ‘pure play’ real estate entity with independent management and operations, allowing focus and extraction of value from excess real estate assets.
For every 20 shares of Vedanta Ltd, shareholders will receive 1 share of Vedanta Property Platforms Ltd, giving them a stake in the new property company.
The new real estate company will manage 14 land parcels and eight residential and office spaces across various states in India, including Maharashtra and Tamil Nadu.
Vedanta announced its decision to separate its real estate business on July 30, shortly after completing an earlier five-way corporate restructuring.
The company will take over 14 plots and eight residential and office spaces in Gujarat, Maharashtra, Goa, Karnataka and Tamil Nadu. However, the assets are discrete, comprising five flats in Mumbai, two bungalows in Panjim and a few industrial plots.
The company recommends using these assets for purposes such as offices, real estate investment trusts, hotels, residential and corporate rentals.
“Vedanta is primarily a natural resources company and separating its real estate business would allow it to have its own independent management and operations,” said Suman Kumar, analyst at broker Philip Capital.
Solid earnings showing
The five companies reported their first quarterly results since the split on Wednesday and Thursday, reporting cumulative 44% growth in revenues and 144% growth in profits. Mintcalculation.
The original Vedanta Ltd and Vedanta Aluminum Metal Ltd, which now hold the group’s zinc, copper and ferrochrome businesses, were leaders in terms of revenue and profitability.
Vedanta Ltd reported revenue of: ₹24,205 crore during the quarter, a growth of more than half compared to the same period last year. Profits increased by almost three quarters ₹5,473 crore.
Meanwhile, the aluminum company reported that its revenue increased by nearly half. ₹21,105 crore and profit more than three times compared to the previous year ₹5,629 crore.
Of the remaining three companies, Vedanta Power Ltd reported a loss ₹423 crore compared to profit ₹88 crore last year. Vedanta Oil and Gas Ltd and Vedanta Iron and Steel returned to profitability after losses last year. Oil and gas company reports profit ₹945 crore from loss ₹103 crore and iron and steel showed a profit of 103 crore ₹compared to 122 crore ₹142 crore losses a year ago.
“Vedanta Group’s strong earnings growth was largely driven by its aluminum business, which benefited from higher aluminum prices, increased production volumes and weak rupee,” said Kumar of Phillip Capital.
“The group’s overall performance was boosted by the inclusion of Hindustan Zinc, which remains a subsidiary of the company, whose strong profitability has been transferred to Vedanta’s standalone results. Its steel arm also posted profits on the back of strong steel and pig iron prices,” he said.
The total market capitalization of the companies was as follows: ₹3.2 trillion on Thursday ₹The undivided Vedanta Ltd was valued at 3 trillion in late April, just before the split. However, the total value of companies today is significantly higher than in previous years. ₹When the demerger was first announced in September 2023, the market cap of undivided Vedanta Ltd was ₹82,000 crore. During this time, the benchmark Sensex gained just under a fifth.
“The demerger of Vedanta unlocks significant shareholder value as the market capitalization of the resulting companies grows larger each day. ₹71,000 crore in the (first) quarter, said Ajay Goel, group chief financial officer, Vedanta.
