Vedanta’s Demerger Unlocks Massive Potential: Agarwal Targets $100 Billion Valuation for Every Entity

Vedanta’s Demerger Unlocks Massive Potential: Agarwal Targets $100 Billion Valuation for Every Entity​

Vedanta Chairman Anil Agarwal revealed an extraordinarily bullish vision for the company's newly listed entities following the completion of the ambitious demerger. He asserted that every one of the five standalone businesses could ultimately achieve a valuation of $100 billion. This aggressive outlook is being fueled by the expectation of India entering a long-term commodities growth cycle, supported by rising demand and prevailing supply constraints.

Speaking to CNBC-TV18, Agarwal stressed that the corporate restructuring benefits investors by allowing them to appreciate the distinct value of each business independently. He maintained that given the critical dynamics between metals and natural resources, creating new capacity in these capital-intensive sectors requires immense investment and long gestation periods.

Vedanta Aluminium's Aggressive Capacity Surge​

The aluminium division has emerged as a highly valuable segment within the group’s newly listed portfolio. Agarwal confirmed that Vedanta Aluminium is on an aggressive expansion trajectory for its production capability. The company currently stands at approximately 3 million tonnes of production capacity.

Over the next three to three-and-a-half years, the management plans to double this output, targeting a capacity of 6 million tonnes. In a more ambitious long-term plan, the company aims to scale up aluminium capacity to 10 million tonnes within five years.

Agarwal underscored that Vedanta Aluminium operates as the lowest-cost producer globally and maintains a fully integrated operational model. Furthermore, he noted the unit's potential to generate $5 billion in EBITDA even at its current production level of 3 million tonnes, with further expansions promised enhanced earnings down the line.

Steel and Resources Outlook Drive Future Growth​

Agarwal also outlined an expansive growth plan for the group’s steel business. He stated that Indian steel demand is set for significant increases over the coming years, providing a massive opportunity for Vedanta. The company intends to substantially increase its capacity in this sector.

The chief executive added that the firm must produce 50 million tonnes of steel in the near future. Vedanta holds distinct competitive advantages through its integrated operations, including secure access to iron ore, coking coal linkages, and gas availability.

Addressing matters of corporate leverage, Agarwal clarified that debt is a standard component of business operations. He assured stakeholders that Vedanta Resources' debt levels are expected to decline further over the next few years. The group remains comfortable with its current debt position and has multiple avenues to raise necessary capital when required.

Market Reaction as Entities Trade Independently​

The interview comes amidst varied market performance following the listing completion of the four demerged entities. Vedanta Aluminium Metal Ltd began trading independently on Monday, debuting at Rs 522 per share, before hitting the lower circuit limit and settling at Rs 495.9 by late morning.

Meanwhile, while Vedanta Iron and Steel Ltd hit its upper circuit limit, rising 5.3 percent, other segments showed mixed results. Vedanta Oil and Gas Ltd was locked in its 5 percent lower circuit at Rs 36.1. Conversely, Vedanta Power Ltd gained 3.5 percent above its listing price on the day.

The combined market valuation of Vedanta Ltd along with the four demerged companies remains well elevated compared to the pre-demerger valuation. This suggests that investors continue to see merit in the restructuring and the prospect of sustained long-term value creation across these standalone businesses. Agarwal also indicated that a future listing of Vedanta Resources is being considered, with the potential reaching $100 billion should such plans proceed, potentially including a listing in the United States.