Vedanta Limited (NSE: VEDL) has taken a decisive step in unlocking the value of its infrastructure and power solutions arm, with its subsidiary Sterlite Electric formally applying for an initial public offering. The proposed IPO structure combines a fresh issue of equity shares with an offer for sale by existing shareholders, giving the market a twin-track route to invest in one of India’s most prominent cable and transmission solutions providers.
The IPO filing sets out plans for Sterlite Electric to raise capital through the issuance of 77.9 crore fresh equity shares of face value ₹2 each, while an equivalent 77.9 crore shares will be offloaded by existing shareholders through the OFS route. This dual structure will allow Sterlite Electric to raise new capital to expand operations and simultaneously provide liquidity for early investors and promoters. For Vedanta Group, which has long been exploring ways to unlock hidden value from its sprawling mix of businesses, the move marks a major milestone.
Why has Vedanta chosen this moment to list Sterlite Electric and separate it from its other businesses?
The decision to bring Sterlite Electric to the public markets comes at a time when Indian capital markets are rewarding infrastructure, electrification, and green energy themes with premium valuations. For Vedanta, the listing is also a logical continuation of a multi-year strategy to separate its regulated transmission infrastructure business from its manufacturing and product-led operations. By unbundling, Vedanta can give investors a cleaner way to evaluate Sterlite Electric as a growth-focused manufacturing and EPC player rather than as part of a conglomerate where the valuation has often been suppressed by a so-called conglomerate discount.
This plan is not new. As far back as 2021, Vedanta floated ideas to list its power and transmission arms, though at the time weak market sentiment delayed the move. Since then, sector dynamics have improved, with strong government push on grid modernization, renewable integration, and domestic manufacturing. Private equity investors have also validated the story. In late 2024, Sterlite Power, which houses the precursor operations of Sterlite Electric, raised more than ₹700 crore from global investors including GEF Capital Partners and ENAM Holdings. This round signaled that institutional investors were prepared to back the standalone business. With that foundation in place, Vedanta appears to be seizing what it considers a favorable window.
What exactly is Sterlite Electric’s business model and where is its growth momentum coming from?
Sterlite Electric’s core business spans conductors, power cables, optical ground wire, high-voltage and extra-high-voltage systems, along with specialized EPC solutions for utilities and private customers. It sits at the intersection of India’s growing demand for upgraded transmission corridors, renewable power evacuation systems, and export-driven demand for cables and conductors.
Order momentum has been encouraging. In the April–June quarter of FY26, Sterlite Electric secured contracts worth more than ₹1,500 crore across multiple categories including conductors, cables, OPGW and grid strengthening projects. For the full year FY25, reports indicated that Sterlite Electric booked orders worth around ₹7,500 crore, reflecting healthy traction in both domestic and export markets.
Financially, the company’s standalone revenues for FY25 are estimated at ₹4,955.76 crore with EBITDA of approximately ₹430.78 crore. However, consolidated results revealed a net loss of around ₹156 crore, underscoring the pressures from debt costs, execution delays, and intercompany allocations within the Vedanta ecosystem. Despite the red ink at the bottom line, the strong order inflows and diversified portfolio suggest that Sterlite Electric’s underlying growth prospects remain compelling in a sector where demand visibility is robust.
How is the IPO structured and what are the valuation benchmarks investors should watch?
The IPO filing provides for 77.9 crore shares in a fresh issue and an equal number under the OFS. While pricing has not yet been disclosed, investors are already watching unlisted share markets and grey market premiums for clues. Past trades of Sterlite Power shares in the unlisted market had been quoted around ₹510 per share, but those levels are only indicative and not binding when it comes to actual IPO pricing.
In comparable terms, peers in the infrastructure and electrical equipment space such as Power Grid Corporation of India and Tata Power trade at price-to-earnings multiples between 15 and 25 times. However, Sterlite Electric’s current losses and its higher leverage profile mean investors will scrutinize whether the company can justify a premium valuation. If anchor investor demand is strong and institutional subscription solid, pricing could tilt toward the higher end of expectations. On the other hand, an aggressive valuation could risk a subdued listing.
The OFS component also deserves attention. Promoter shareholders who hold more than 20 percent of the company’s equity pre-IPO can sell up to half of that holding, subject to lock-in provisions, while smaller shareholders can offload up to 10 percent. Lock-in periods post listing and clarity on promoter intentions will be key to shaping investor confidence.
What role does this IPO play in Vedanta Ltd’s broader corporate strategy?
Vedanta Ltd has historically carried a heavy debt load, balanced against its highly diversified portfolio spanning mining, oil and gas, power, and metals. Unlocking value through subsidiary listings has been one of the strategic levers the group has considered to deleverage and provide sharper valuation for its individual businesses.
The Sterlite Electric IPO aligns with this playbook. For Vedanta, listing Sterlite Electric creates an opportunity to raise fresh growth capital, reduce financial pressure, and attract new pools of investors keen on India’s electrification and renewable grid story. The move also helps demonstrate to equity markets that Vedanta can deliver on promises to separate businesses and monetize them in value-accretive ways.
Vedanta’s own stock has responded favorably to news of the IPO filing. The shares recently traded around ₹465.80, up about three percent in a single session after the application was made public. Investors seem to interpret the IPO as a sign that Vedanta is actively pursuing monetization and capital recycling. Institutional sentiment is cautiously optimistic, with analysts emphasizing that execution quality and pricing discipline will be crucial for the IPO’s ultimate success.
What risks and uncertainties could cloud the IPO process?
Despite the optimism, several risks remain. First, the IPO requires regulatory clearance from SEBI, which will scrutinize the draft red herring prospectus, disclosures on related-party transactions, and group structure. Any delays or adverse observations could postpone or alter the offer.
Second, the broader IPO market environment is notoriously cyclical. If global or domestic macro sentiment turns risk-off, investor appetite for infrastructure manufacturing plays may wane, forcing Vedanta to revise its pricing or even defer the launch.
Third, while order inflows are strong, Sterlite Electric’s profitability remains uneven. Sustained losses or margin pressures from input costs like copper and aluminum could raise concerns about long-term earnings potential. Competitive intensity from global manufacturers is also a structural challenge.
Finally, large promoter selling through the OFS route could be interpreted as opportunistic, especially if valuations are rich. That could dampen institutional enthusiasm unless balanced by clear growth deployment of the fresh issue proceeds.
What should investors watch next in Sterlite Electric’s IPO journey?
The next milestone will be the filing of the draft red herring prospectus, which will provide detailed financials, debt restructuring plans, and the intended use of proceeds. Investors will closely track the price band announcement, anchor book subscription levels, and grey market premiums as leading indicators of demand.
Institutional flows, especially foreign institutional investors (FIIs) and domestic institutional investors (DIIs), will play a crucial role in establishing confidence. If FIIs perceive Sterlite Electric as a proxy for India’s power infrastructure growth story, demand could be strong. Conversely, DIIs may weigh short-term profitability concerns more heavily. Retail sentiment will likely be influenced by anchor participation and grey market buzz.
If successfully executed, the IPO could become one of the defining listings in India’s energy and infrastructure segment, showcasing how conglomerates can unlock value by separating regulated assets from growth-oriented product businesses. For Vedanta, it could also set the stage for further capital unlocking initiatives across its vast empire.
Sterlite Electric’s IPO is shaping up as both a financing event and a structural milestone for Vedanta Group. The success of the listing will depend on timing, valuation discipline, anchor investor backing, and the company’s ability to demonstrate that its order book momentum can translate into sustained profitability. If those pieces fall into place, this offering could emerge as a landmark in India’s capital markets, reflecting the country’s larger story of electrification, infrastructure build-out, and industrial growth.
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