Vedanta’s demerger delay lingers as Q2 output hits new highs

Vedanta has also benefitted from the surge in silver and copper prices, where the supply has been tight in recent months.

Investors in the shares of mining major Vedanta will assess the news around a delay in the demerger of key verticals, strong second quarter business update, along with the ongoing strength in global base metal prices.

Vedanta has also benefitted from the surge in silver and copper prices, where the supply has been tight in recent months. A recent note by Nuvama found Vedanta as 'irresistible' at current market prices, assigning a target price of Rs 601 which is higher by almost 28% from the last closing price.

Vedanta's Q2 Production Update

The natural resources miner reported record quarterly and half-yearly aluminium production, with highest-ever second quarter production for zinc, posting a minor growth on YoY basis. Vedanta also posted its highest-ever quarterly and half-yearly alumina production from its Lanjigarh refinery, the company filing showed.

Vedanta’s average daily gross production of oil and gas dropped 15 percent in Q2FY26 to 89,300 barrels of oil equivalent per day (boepd). The production of iron ore fell by 19 percent to 1.1 million tonnes during the quarter, likely owing to higher rainfall, or weak construction demand for steel.

While the quarter was marked by higher production in aluminium, alumina, zinc, and pig iron, the miner saw a sharp drop in lead and silver production during the quarter, dragging the metal basket.

Demerger Delay

Owing to delay in the approval from the National Company Law Tribunal (NCLT) and authorities, Vedanta informed that it has pushed back the deadline for demerger to March-end next year. The demerger is expected to pave the way for Vedanta's various verticals to become six separate entities.

"Given that the conditions precedent in the Scheme, including approval of the National Company Law Tribunal, Mumbai Bench (NCLT) and approvals from certain government authorities are in the process of being completed, the board of the company and the resulting companies...have decided to extend the timeline for fulfilment of the conditions precedent from September 30, 2025 to March 31, 2026," Vedanta said.

The NCLT has slated the hearing on Vedanta's demerger proposal on October 8 following Petroleum Ministry's objections over disclosures. "The government (ministry of petroleum and natural gas) is not opposing the demerger scheme, they are worried about claims on RJ Block and cover reduction on demerger," Vedanta lawyers had told in NCLT, according to news reports.

The hearing will be closely tracked for any further signs that could extend the timeline further. “If that happens (conclusion of the hearing), all uncertainties related to demerger will go away and it can be concluded in Q4FY26, unlocking value,” Nuvama said in a recent note.

Vedanta said it is committed to its strategic reorganization plan and "continues to work towards unlocking long-term value for all stakeholders."

Base Metal Rally

Copper, aluminium and other base metal prices have risen to multi-year highs on tighter supply as well as strong demand.

Just days ago, China had lowered its output growth target for non-ferrous metals - including copper and aluminium - for the year 2025 and 2026, in its efforts to curb oversupply after years of capacity addition. US President Trump's tariffs on aluminium import have been pushing up US prices of the commodity higher, and according to the CEO of Alcoa Corp, Bill Oplinger, this could destroy demand. “It’s hard to envision a situation where aluminum is systematically 50% more in the US without some type of demand destruction,” Bloomberg News quoted CEO Oplinger on September 24.

Expansion Plans

Vedanta has plans to ramp up investment in the domestic production of zinc, silver, aluminium, copper, that are crucial to defence, aerospace, automotive and clean energy. In zinc, Vedanta has a 77% market share in the domestic primary market and meets around 10% of India’s silver demand. In recent auctions, Vedanta has acquired rights to explore mineral blocks in copper, graphite, nickel, cobalt, and gold, among others.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.