Vedanta Power shares drop 3%, fall below listing price. What lies ahead?

The shares of Vedanta Power dropped more than 3% on Thursday to fall below its listing price, with analysts highlighting that the counter remains the most defensive among the four stocks that debuted on Dalal Street earlier this week after the mega demerger.The company's shares dropped to Rs 40.70 apiece on the NSE, with its market capitalisation nearing Rs 16,000 crore.

Vedanta Power debuted at Rs 41.80 per share on the NSE on Monday.

The shares of the company fell 2% on the first day, and another 2% on Tuesday, before jumping 5% on Wednesday.About Vedanta PowerVedanta Power has more than 4 GW of installed capacity in four strategic assets in Punjab, Andhra Pradesh, Chhattisgarh and Odisha.

It has several long-term and mid-term Power Purchase Agreements (PPAs) with state utilities.The power company aims to become one of India’s top three private thermal power players by FY33 through a combination of organic expansion and asset turnarounds.

Its portfolio comprises Vedanta Power Talwandi Sabo Thermal Plant in Punjab (1,980 MW), Vedanta Power Meenakshi Energy in Andhra Pradesh (1,000 MW), Vedanta Power Sakti in Chhattisgarh (600 MW operational with another 600 MW under commissioning), and Vedanta Power Jharsuguda Thermal Plant in Odisha (600 MW).Also read: Vedanta Power shares list at Rs 42 as mega demerger concludes“The company believes coal will continue to play an important role in India’s energy mix for decades to come, co-existing alongside renewable and clean energy sources.

In parallel, Vedanta Power, currently a pure-play thermal player, is evaluating future growth opportunities across hydro, battery storage and nuclear power as part of its long-term diversification strategy.

The company recognises nuclear energy’s potential as a clean, reliable 24x7 power source and a key enabler of India’s energy transition,” the company said in a press release.What lies ahead for Vedanta Power shares?While the post-listing volatility across the new four Vedanta entities spooked investors, Harshal Dasani, Business Head at INVasset PMS, explained that this is typical of demerger scenarios where price discovery happens in compressed windows and pre-listing positioning unwinds rapidly.

He suggested a framework for investors to evaluate these names based on business quality rather than price action.

“Four variables matter: where the underlying commodity sits in its cycle, the balance-sheet position of each entity post-demerger, capex visibility and execution credibility, and the regulatory or pricing environment specific to that sub-sector.

A directional view at the sector level is the appropriate framing,” the analyst said.Also read: 4 new Vedanta Group stocks debut on Dalal Street.

What's ahead?Power is the most defensive of the four, with regulated returns offering stability but limited upside, and the modest price action fits that profile, according to the analyst.

“Oil and gas face the most challenging setup, with mature fields, a declining production trajectory in domestic blocks, an unsupportive crude price backdrop, and limited reinvestment optionality, which the price action through three lower circuits reflects.

The honest read is that the quality and visibility tilt favours the early-cycle commodity exposure and the regulated utility profile over the late-cycle and declining-asset profile,” he concluded.Also read: Vedanta Aluminium shares jump over 3% after Citi, Kotak initiate with Buy, see up to 29% upside.

Here’s why(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own.

These do not represent the views of The Economic Times) ...