Vedanta Power Slides Below IPO Price on Demerger Delay

Vedanta Power shares fell 3% in early Tuesday trade, dropping below their initial public offering listing price for the first time since the company listed last year, according to exchange data. The stock opened at a discount and stayed under water through the morning session.

The move comes as the broader Vedanta group contends with a stalled demerger plan. Vedanta Ltd shares have lost 64% over the past year. A Supreme Court decision in May cleared an AdGroup resolution plan that Vedanta had opposed – a setback for the parent company. The demerger timeline, once expected by the end of 2024, now lacks a clear deadline.

For the power sector, the readthrough is narrow. Vedanta Power is a captive electricity business tied to the group's aluminum and zinc operations. Its IPO pricing assumed a clean demerger path and stable coal costs. Neither assumption has held. Thermal coal prices have remained volatile, pressuring margins for plants that rely on merchant purchases rather than long-term supply contracts. Vedanta Power falls into that category. The demerger uncertainty also complicates the company's ability to raise project financing independently.

Other Vedanta subsidiaries – Hindustan Zinc and Vedanta Resources – trade at sharp discounts to sum-of-parts valuations. Vedanta Power, now below par, follows the same pattern. The discount reflects legal and capital-structure risk, not operational weakness. India's power demand remains strong. That tailwind does not fix a parent-company overhang.

The next real catalyst is a court hearing on the demerger scheme. Until that timeline firms up, Vedanta Power will trade on Vedanta group sentiment, not on its own earnings. The demerger timeline remains uncertain. No date has been set for the next hearing.