What will be the impact of NCLT approval on Vedanta demerger on dividend, how much benefit will the share buyers get?:

News Topical, Digital Desk : Nuvama Institutional Equities believes that a major decision regarding the demerger could prove to be a game changer for the stock. The brokerage maintains a 'Buy' rating on Vedanta and has a target price of Rs 686, indicating an upside of approximately 36% from current levels. According to Nuvama, the demerger, delivery, and debt reduction strategy are now ready to bear fruit. The Mumbai NCLT has approved Vedanta's demerger scheme under Sections 230–232 of the Companies Act. With the court's approval, the last major regulatory hurdle, which had repeatedly delayed the demerger timeline, has been cleared. The company's progress on all three fronts is moving in the right direction. Furthermore, strengthening commodity prices remain a significant tailwind for Vedanta. The brokerage expects the demerger to be completed by the end of Q4 FY26. This is why Nuvama sees a significant upside in Vedanta's stock.

What benefits will investors expect from the demerger? The demerger will split Vedanta into five separately listed companies. This will give investors the opportunity to invest directly in the commodity or business of their choice. Nuvama estimates that after the implementation of the demerger, Vedanta's fair value could gain approximately ₹84 per share. This means that the demerger is not just a structural change but also a major means of unlocking value.

No fear of default - Nuvama has completely dismissed the concerns that have been raised in the market from time to time regarding debt. The brokerage states that neither the promoter company, Vedanta Resources, nor Vedanta Limited faces any risk of default. Vedanta Resources has extended its debt tenure. Its net debt at the end of Q2, FY26, was approximately $4.4 billion, which is repayable by FY34. This has significantly eased liquidity pressure. Vedanta Limited's net debt (excluding Hindustan Zinc) is expected to decline to ₹58,500 crore by FY27. The net debt/EBITDA ratio is also expected to decline from 2.7x in FY25 to 1.4x in FY27. Strong cash flow, better commodity prices, and new projects expected to be operational in FY26 will help reduce debt.

EBITDA and dividend support: Nuvama estimates Vedanta's EBITDA to grow at a 16% CAGR during FY25–FY28. This is driven by lower aluminum costs, increased aluminum and zinc volumes, and higher commodity prices. Furthermore, the brokerage expects another dividend (DPS) of ₹20 per share by January 2026, which will act as an additional trigger for investors. According to Nuvama, the December decision on the demerger, a sharp decline in debt, and a strong commodity cycle could together propel Vedanta's stock to new highs. If these triggers are met on time, an upside of up to 34% in Vedanta could become a strong possibility, not just a guess.