Vedanta Limited announced its intention to delist its American depositary shares (ADS), representing its equity shares from the NYSE and to terminate its ADS program. Upon delisting of its ADS program, the Company will concentrate all trading of its equity shares on BSE and NSE in India. Board of Directors of Vedanta has taken note of low trading volume of its ADS on the NYSE and the associated costs of maintaining the listing and related obligations.
Company proposes to delist ADS for 16.11 cr shares, being 4.33% of present equity. ADS Holders are given an option, either to convert in equity by 8th December, or ADS will get extinguished by paying them cash. This whole move may need about Rs.5,000 cr, which will be paid by Vedanta. Post ADS delist, promoter stake will rise to 68.18% from 65.18%.
In all probability, once this ADS delisting gets completed in this December Quarter, promoter will initiate raising its stake by 5% via creeping acquisition in coming March quarter. All this establishes good profitability at the company end, commitment of the promoter seen raising stake in the company for last 1 year, while dividend yield of 6% is seen an icing on the cake.
Inspite of so many positives, stock fell by Rs.7 on last Friday, reacting to ADS delisting, which is so unfortunate, which may have either been a tactical weakness, or work of vested interests like Media, to scare retail investors, or to make Big Fish buy the stock now at lower levels.
Vedanta share now ruling at Rs. 293 can move to Rs. 324 in October month, and Rs. 349 by December and Rs. 399 by March, 22.
Few members here may not take these targets seriously, lack of faith or relying more on Media, or always seen in fault finding, as they will wait here, to see targets missing, either on amount or on time, or few who start expecting these targets next morning, with no respect to given time horizon. Forgot to mention last category, who will keep reaffirming these targets every day, and more on weak days of the stock.:)
This is not a Buy or Sell recommendation, while stock recommendations are provided exclusively to our paid members in the Member Zone.