Vedanta - Profit Chhapar Phad Ke?

By Research Desk
about 3 months ago

Vedanta has posted robust consolidated Q3 FY 21 numbers, with PAT of Rs. 3,300 crore and cash profit of Rs. 5,200 crore for Q3. Vedanta is a play on natural resources, with global leadership position seen in Non Ferrous Metals. Vedanta is into production of Zinc, Lead, Silver, Copper, Aluminium, Oil & Gas, Iron Ore, Power, Steel, Ferro Alloys etc, with integrated operations seen for few of them. What is interesting to note that all the segments of Vedanta are presently doing exceedingly well, which happens rarely with any company.

Ishwar deta hai to chhapar phaad kar deta hai. This is what is seen happening with Vedanta now. Profits are not seen restricted for Q3, but clear visibility for all 4 quarters of calendar year 2021 are seen. However, an amount of Rs. 7,000 crore was lent by overseas subsidiaries of Vedanta to its promoters Vedanta Resources Ltd, as part of its cash management. Same promoter acquired 5% stake of Vedanta Ltd. for Rs.3,000 crore in December, while acquiring 10% more through open offer for Rs. ,6,000 crore in the near future. No doubt, it is not a good practice, but vested interest Media and few global investment bankers (as they were never given any mandate by the company or the Group)  wrote off the company fully, making share price to fall in double digit, 3 months back, where we found it as a screaming and value buy, with our call seen having worked well. You can not award death penalty for stealing Bread? Punishment must be rational and unbiased, but this approach is seen missing with Media and few Investment Bankers, due to their arrogance.

Vedanta Ltd, seen having an income of close to Rs. 1 lakh crore in FY 22,  with PAT of about Rs. 10,000 crore, on small equity base of Rs. 372 crore, giving an EPS of Rs. 27, can not rule at Rs. 186 or so. At one time M Cap of the company fell to  Rs. 35k crore, which is now at Rs. 70k crore, having doubled. Vedanta is  holding 65% stake in Hind Zinc, having present market value of Rs. 82k crore alone. So a slap on face of critics, by teaching them a lesson that one must be reasonable even while venting out anger or bias.

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