Vedanta Limited - Future Natural Resource Leader


(yourraj) #1

Vedanta Limited, formerly known as Sesa Sterlite/Sesa Goa Limited, a Vedanta Group company is one of the world’s largest global diversified natural resource majors, with operations across zinc-lead-silver, oil & gas, iron ore, copper, aluminium and commercial power

Moats:
Low cost Producer
Heavy capex needed which create barrier to entry
Geographic advantage Low Transportation being at Goa
Scalability having sound balance sheet
Unique natural resources company Diversified risk probably one of its kind

Stock: Cyclic; Mining; Metals; Diversified Natural Resource
CMP: 318 P/E: 9 52week+/_ : 205 & 346 Face Value : 1

Risks: :jack_o_lantern:
• On the aluminium side, market has been developing very well and there have been some constraints in supply. Mainly in China, there might be some restrictions because of the environment factors
• Recent coal and pollution measures along with coal availability to not improved
• Vedanta had augmented large capacity through acquisitions and capex, which was largely debt funded
• Contribution of metals, minerals and oil and gas in India’s GDP is only 2 per cent
• Govt regulations and Chinese competition
for more risk and opportunities one can refer to IPO in the reference:gift:

Opportunities: :sparkler:
• Vedanta have a very strong balance sheet. It gives company an edge for immense opportunities to grow.
• Vedanta has a diversified business risk profile spanning iron ore, copper, zinc, lead, silver, aluminium, power, and oil and gas, and will benefit from long-term growth and business opportunities in each segment.
• Assuming Indian growth at plus or minus 7.5 to 9 percent, in ten years’ time, the demand for metals will grow to about three to four times the current size of the market (company’s version)
• of mining operations in Goa and lower transportation cost,and reducing production cost conversion of 1800-megawatt (MW) to aluminium segment at Vedanta Aluminium, and replacement of old 270 MW power plants with new 600-MW captive power plants at Balco during fiscal 2017
• In the oil and gas sector huge opportunity and as it can scale up with investment to further enhancing its crude production capabilities.
• Geographic advantage: The company has a presence across India, South Africa, Namibia, Australia and Ireland. Vedanta is the Indian subsidiary of Vedanta Resources Plc, a London-listed company
• Future Outperformer: Global investment firm Credit Suisse has initiated coverage with an outperform rating on the stock as it is a leveraged play on aluminium.

Fundamentals :money_mouth_face:

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History ::sunglasses:
Last 10 years at Glance Major events
2006 : Vedanta Resources plc, a diversified metals and mining group, listed on the London Stock Exchange acquires 51% controlling stake in Sesa Goa Limited from Mitsui & Co. Ltd.

2009 : Sesa Goa Limited acquired all the outstanding common shares of VS Dempo & Co. Private Limited, along with its 100% equity shares of Dempo Mining Corporation Pvt. Ltd and 50% equity shares of Goa Maritime Private Limited.

2011: it has acquired the assets of Bellary Steel & Alloys Limited (BSAL)

2012 : - Sesa Goa Limited has completed the acquisition of Goa Energy Private Limited & Sesa Goa Limited announces that it has acquired the remaining 49% of the outstanding common shares of Western Cluster Limited

2014 : -SSL- Kitchen Waste Producing Cooking Gas and Creating Greenery in Lanjigarh & it Announces Development of Gamsberg-Skorpion Integrated Zinc Project

2015 : -Sesa Sterlite arm gets approval for starting power plant& restarts mining in Karnataka : completed the merger of its subsidiary Sterlite Infra with itself and renamed Vedanta Limited

2016 : -Vedanta Successful bidder of Gold Mine : merger of Cairn India Limited
History credit rating
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CSR & Sustainability: :palm_tree:
Football club promoted by this company SESA F.A:soccer:
• in 2016 Vedanta recycled 47% of the fly ash
• in 2016 vedanta recycled 23% of the water utilized during its operations
• It has unique Public-Private-Partnership (PPP), with the Ministry of Women and Child Development, Government of India to start Project Nandghar developing Aanganwadi infrastucture
• Continuous improving the life vide community development programme with regular investments

Quality Mutual funds increasing their stack in the company from last 5 years viz HDFC Mutual Fund ;Aditya Birla Sun Life Mutual Fund ;UTI Mutual Fund ;Reliance Mutual Fund ;SBI Mutual Fund ;ICICI Prudential Mutual Fund ;DSP BlackRock Mutual Fund ;Kotak Mahindra Mutual Fund ;Mirae Asset Mutual Fund ;L&T Mutual Fund

Reference:
• IPO at London stock exchange : http://www.vedantaresources.com/media/9402/vedantaprospectusfinal-6december2011.pdf
https://en.wikipedia.org/wiki/Vedanta_Limited
• Old report of MOSL: http://www.motilaloswal.com/site/rreports/636050349622668100.pdf

Disc: Currently not invested looking forward for views and need help to find out additional threats and opportunities that I couldn’t documented .It is not investment proposal do your own research before investing looking forward for the views and arguments to negate my rational for investment and reply to my concerns


(seeankur) #2

this is highly cyclical stock. Current rally started in metals stock way back in 2016. You can ride the rally. also it is near 200 moving average then its good time to catch this stock.

disclosure: - invested at around 70 Rs level


(yourraj) #3

Thanks for visiting and could you please share your rational about the company as you already invested in the company long ago . I think it is overvalued however liked you said it is near 200MA and in light of various companies are bidding for Nonperforming Steel companies which are almost near last stage of liquidation What can be probability that it will be in race with its pears Such as JSW steel Tata or Mittal group

And secondly How long can be the rallying last ?

As per Global Steel council the Indian steel will grow @7.3% in 2017 and @8% in 2018

Govt will also have to remove import duty in the light of Free Trade agreement which can be rolling soon what is your views on this ?

It will help me to create some tracking position
Regards


(seeankur) #4

I invested when mkt was not liking steel sector. Also I am bit of technical analyst… during Feb 16, there was positive divergence and so I picked the stock.
My take on picking cyclical stocks are :-

  1. Sector should be ignored by all the people.
  2. Divergence at the bottom.

Both these points helped me in picking Hindalco and Vedanta at nearly 70₹.

I see the rally is half done… more is still left.

Thanks


(sunilgct) #5

I think its a good opportunity to add for interim dividend and income will still be tax free . The effective date is 20th march and if one can hold on can get capital appreciation as well else even it corrects back to ex dividend 30% tax can still be saved.
Any thoughts


(Rohit) #6

Yes , Dividend yield comes around 6.5% tax free which is equal to most banks offering in FD (taxable). 6.5% we can get in few days and can sell again once price reaches our purchase price or more than that. Seems like low risk , decent returns(10-15% in a year) in opportunity.

Disc : Purchased today.


(yourraj) #7

Recent crash in prices may open fresh entry in stock .As predicted the stock is riding the cycle
Edelweiss is giving target 425

https://m.economictimes.com/markets/stocks/recos/buy-vedanta-target-rs-425-edelweiss-financial-services/amp_articleshow/63889396.cms


(Rohit) #8

Anyone tracking this ? Stock has gone below 250 levels due to protest. Current dividend yield comes around 8% at 250 rs. If we consider the worst case scenario (plants get shut down permanently due to protest). What would be the impact on the balance sheet and profitability. Can it hurt in a big way or a short term pain, I am interested to buy due to high dividend yield (FD offers 6.4% , Div yield is 8%). But searching for answers of above questions. Would appreciate if someone can help.


(yourraj) #9

instead of giving you direct reply i would suggent to find out what is the % of sales contributed by this unit . ?
secondlly find out the % of copper in sales figure Another home work you can do to to find out the Global trend of the copper

Once you build the conviction in the stock than you must have reason to hold it for longr duration of time .marriage partner and Dating two diffrent things .If you Marring you need to find out the resons why you should and what will be the worst case .

"BEST TIME TO BUY a stock when the BLOOD is on the Floor no MATTER if the BLood include Yours(IN CASE You bought earlier ) "

Technical chart shows there a furthur decrease in the prices expected .if i would you i would wait to fall furthur .I use technical indicators to find a good time to enter a fundamentally good stock in truth TIMING of MARKET is hard to achive.

Do the fundamental analysis of the stock and on top YOU need to be WELL minded the Metal and mining stock are of Cyclic in nature.

Temporary NOIse in the Market Create the OPPERTUNITIES… But ensure you have ample Margin of SAftey .It is easy to praech but hard to Practice .(I have suffred in the PAST )IF Making MONEY is SO easy IN The stock MARKEt Thzn everyone CAN Made the MONEY .
I have wriiten down the case but still not purcahsed a single unit pof this QUALITY stock

AND ANOTHER THING THE DIVIdend IS PAID ON THE FACE Value not ON THE Current market Price SO be careful in that ?
Wish You all best in Value hunting
Regards


(Rohit) #10

Thanks for sharing your insight. But Face value does not hold much significance. Its the dividend yield we should look at. If its paying the yield of 8% , i.e. 21 rs on every 250 rs invested. It seems good , considering FD rates in India. However , the question is will they be able to give similar or more dividend in near future. Which will depend on the earnings.


(shreys) #11

The dividend yield is without a doubt lucrative at current levels. If there’s erosion in the price of Vedanta like the one seen in 2010, the yield will get even better. But, our invested amount will be eroded tremendously. Hence, in my humble opinion, it may not be such a good idea to look at the dividend yield in cyclical companies.


(Amit) #12

This looks very attractive at this level. I estimated the intrinsic value based consolidated balance sheets.
Is the current price a result of bearish market mood?
Any views are welcome.


(yourraj) #13

I don’t know how Vedanta acquired Electro Steel Limited even the case was under NCLT . Is it due to company’s closeness to recent Government or something else But on Vedanta front seems good after getting management control of EsL they had decided to invest to increase the capacity

In December there was Another boost

Second Quaters result update

Disclosure: Not invested in the company yet however it is 30% down from the day I made rational of investment


(AtulD) #14

Motilal Oswal

  • Downgraded to ‘sell’ from ‘buy’; cut target price to Rs 170 from Rs 230.
  • Ebitda was in line, but mark to market gains lead to net profit beat.
  • Related-party transaction will de-rate the stock.
  • Transaction appears at arm’s length, but the counter party risk is high because parent drives its value from Vedanta and (parent) is highly leveraged.

(yourraj) #15

Vednata earning is down but the with the increase of bottom line the company is eyeing to reduce the cost of the aluminium production However whether this is right time to buy or not I don’t know therefor is down approx 20%!mainly due to shutdown of smelter and price drops in the sector … But the company’s moves validate the topic FUTuRE Natural Resource Leader
http://www.ratestar.in/company/vedl/500295/Vedanta-Ltd-100295

The enterprise value as compare to market cap is looking very promising opportunity to invest


(svasa13) #16

Vedanta recommended a Rs 1.85 per share

The Board of Directors of the Company, in their meeting held on March 6, 2019, have approved 2nd Interim Dividend of Rs. 1.85/ - per equity share i.e . 185% on face value of Re .1/- per share for the Financial Year 2018
19. The record date for the purpose of payment of dividend is March 14, 2019.The total payout is Rs.685 Crore.

With this the total dividend for the year stands at Rs. 18.85/- Per Equity Share representing a dividend yield of ~8% based on last one year average share price of the Company


(yourraj) #17

@ayushmit there might be mix in standalones and consolidated numbers in Vedanta or I might be missing something Could you Please advice Mar 13 ( sesa sterilite )to mar-14 ( Vedanta ) and onwards as well it shows is exponential rise in sales as per the data of screener regarding Vedanta

Mar-13 Mar-14
2,748.94 66,152.41

also I made small analysis

Due to overall lower prices in the commodities and the prices appreciating rupee may result further fall in the VEDANTA
This is what I know that in case of commodity Product business only the business with large scale of operations and tat have low cost of production will sustain in the long Run But This stock has gone lower ta what I expect ,Sitting on CSH IS REALLY Tough But HATS OFF to VP Forum and seniors that are guiding Novices like me .BHAVANOAN MAIN BHEKNEY SE BACHNE KE LIYE THANKS VP
disc : still not invested curious to know more and sitting foolishly :sleepy:

some news



Happy Investing


(yourraj) #18

some updates
Zambian villagers win right to sue Vedanta subsidiary in UK
https://www.msn.com/en-in/news/other/zambian-villagers-win-right-to-sue-vedanta-subsidiary-in-uk/ar-BBVPQkx