Shares of Vedanta Ltd fell nearly 3% on August 20, 2025, after reports surfaced that the National Company Law Tribunal (NCLT) had deferred the hearing on the company’s proposed demerger to September 17. The move followed serious objections raised by the Ministry of Petroleum and Natural Gas, which flagged concerns over alleged concealment of key financial details and potential risks to the government’s ability to recover dues from the conglomerate. The Securities and Exchange Board of India (SEBI) also issued a warning letter to Vedanta, citing a “serious breach” of regulatory norms after the company altered its demerger scheme post-approval.
The stock hit an intraday low of ₹438.15 on the NSE, down from its previous close of ₹450.10. At 1 PM, Vedanta was trading 2.3% lower, while the broader Nifty50 index was up 0.3%, underscoring investor anxiety specific to the company’s restructuring efforts.
🧭 What Triggered the Sell-Off?
The sell-off was triggered by a CNBC-TV18 report that revealed the Centre’s objections to Vedanta’s demerger plan. The Ministry of Petroleum and Natural Gas alleged that Vedanta had inflated revenues and under-reported liabilities, raising red flags about the transparency of the restructuring exercise. The ministry also expressed concern that the demerger could compromise the government’s ability to recover dues from the company.
SEBI, which had earlier granted a No Objection Certificate (NOC) for the demerger, confirmed that Vedanta modified the scheme after receiving approvals—a move the regulator termed a “serious breach” of its master circular. SEBI has issued an administrative warning to Vedanta, further compounding investor concerns.
| Trigger Event | Description |
|---|---|
| NCLT Deferral | Hearing postponed to September 17, 2025 |
| Government Objection | Alleged concealment of financial details |
| SEBI Warning | Scheme altered post-approval, breach of norms |
| Supreme Court Setback | Rejected Vedanta’s plea for Talwandi Sabo benefits |
📉 Vedanta Stock Performance Snapshot
| Date | NSE Closing Price (₹) | Change (%) | Market Cap (₹ Trillion) |
|---|---|---|---|
| August 19, 2025 | 450.10 | — | 1.78 |
| August 20, 2025 | 438.15 | –2.65% | 1.72 |
The stock has now fallen nearly 17% from its 52-week high of ₹526.95, touched on December 16, 2024.
🧠 Demerger Plan: What’s at Stake?
Vedanta’s proposed demerger aims to split the conglomerate into four independent listed entities focused on aluminium, oil and gas, power, and base metals. The company claims the move will enhance operational efficiency, simplify management, and unlock shareholder value. However, the deadline for finalizing the demerger has been extended from March 2025 to September 30, 2025, due to pending regulatory approvals.
| Proposed Entity | Sector Focus | Objective |
|---|---|---|
| Vedanta Aluminium | Aluminium | Operational autonomy |
| Vedanta Oil & Gas | Hydrocarbon | Sector-specific growth |
| Vedanta Power | Energy generation | Efficiency and scale |
| Vedanta Base Metals | Zinc, copper | Focused capital allocation |
The restructuring is seen as a critical move by the Anil Agarwal-led group to streamline operations and reduce debt, but regulatory hurdles have cast doubt on its execution timeline.
⚠️ Legal and Regulatory Setbacks
In addition to the NCLT deferral and SEBI warning, Vedanta suffered a legal blow when the Supreme Court dismissed its plea seeking additional compensation for the Talwandi Sabo Power project in Punjab. The apex court upheld the Appellate Tribunal for Electricity’s ruling that Vedanta was not entitled to ‘deemed export’ benefits under the Foreign Trade Policy.
| Legal Challenge | Outcome |
|---|---|
| Talwandi Sabo Project | Compensation plea rejected by SC |
| BALCO Tax Penalty | ₹80.96 lakh penalty imposed by IT Dept |
Vedanta also disclosed that its subsidiary Bharat Aluminium Company Ltd (BALCO) received a penalty order from the Income Tax Department for the assessment year 2012–13, adding to its compliance woes.
📊 Financial Performance: Mixed Signals
Vedanta reported an 11.7% year-on-year decline in consolidated net profit for Q1 FY26, falling to ₹3,185 crore. However, revenue from operations rose 5.75% YoY to ₹37,824 crore, supported by margin expansion and record EBITDA.
| Financial Metric | Q1 FY25 | Q1 FY26 | YoY Change |
|---|---|---|---|
| Revenue from Operations | ₹35,764 crore | ₹37,824 crore | +5.75% |
| Net Profit | ₹3,606 crore | ₹3,185 crore | –11.7% |
| EBITDA | ₹10,246 crore | ₹10,746 crore | +5% |
| EBITDA Margin | 34.2% | 35.0% | +81 bps |
| Net Debt/EBITDA Ratio | 1.4x | 1.3x | Improved |
Despite strong operational metrics, investor sentiment remains subdued due to regulatory uncertainty and legal setbacks.
🧠 Expert Commentary
Market analysts have expressed concern over the timing and transparency of Vedanta’s demerger plan. Ajay Bodke, an independent market strategist, said:
“The government’s objection and SEBI’s warning raise serious questions about Vedanta’s governance practices. Investors will need clarity before re-rating the stock.”
Brokerage firms have advised caution, with some recommending a wait-and-watch approach until the NCLT hearing concludes and regulatory clarity emerges.
📌 Conclusion
Vedanta’s 3% share price drop reflects growing investor anxiety over its demerger plan, regulatory compliance, and legal challenges. While the company continues to post strong operational numbers, the road ahead is fraught with uncertainty. With the NCLT hearing now scheduled for September 17 and SEBI’s warning still fresh, Vedanta must navigate a complex regulatory landscape to restore investor confidence and execute its ambitious restructuring.
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Disclaimer: This article is based on publicly available financial and regulatory updates as of August 21, 2025. It is intended for informational purposes only and does not constitute investment advice.
