Vedanta having recommended by us at Rs. 95 to our members on 9th Nov, 20, having risen by 145% in 5 months, we are still keeping positive view on the stock, for following reasons:-
1) Q4 EPS on consolidtaed basis is seen at over Rs. 10, with FY 22 EPS seen at Rs. 44, making share to trade at a PE of 5.3x, while comparable peers are trading at a PE of 10x and more.
2) Hind Zinc (HZL), its 65% subsidiary, may declare an interim dividend of Rs. 20 or so, with Q4 numbers,which will see Vedanta receiving Rs.5,500 crores divedend. To claim exemption on this, under section 80M of Income tax Act, Vedanta may decalre a dividend of Rs. 15 per share.
3) Govt may divest its 29.5% stake in HZL in FY 22, with 19.5% as OFS and 10% to be offered and acquired by Vedanta. This will raise Vedanta stake to 75% in HZL.
4) Promoters may look to acquire 5% more in Vedanta in FY22, raising its stake to 70% in Vedanta.
5) Present M Cap of Vedanta of Rs. 85K cr, is equal to 65% stake valuation of HZL, held by Vedanta, with core business of Vedanta seen ruling with NIL valuation.
6) No comparable peer seen available, having presence in verticals of Ferrous and Non ferrous Metals and Oil.
This is not a buy or sell recommendation, while stock recommendations are provided exclusively to our paid members in the Member Zone.