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Vedanta: A Lot Can Happen In Three Months

Apr. 07, 2021 10:50 AM ETVedanta Limited (VEDL)11 Comments
The Alpha Sieve profile picture
The Alpha Sieve


  • The parent company’s desire to increase its stake in VEDL via an open offer has been instrumental in driving the stock.
  • It remains doubtful if VRL was able to garner the entire 17.5% targeted stake as the offer price was still significantly below the range quoted by key institutional investors.
  • The potential acquisition price of BPCL has gone up even further and VEDL could be better served by diverting its attention to rebuilding its copper capacity.
  • The aluminum CoP moved up sequentially, closer to the $1,400/tonne mark, although the company is in the midst of pushing through structural changes that could bring this down to the $1,200/tonne.
  • On the charts, the stock still has upside potential for another ~15-16%, but the outcome of key corporate actions could result in a lot of uncertainties.

Context of the article

The Vedanta (NYSE:VEDL) story can be viewed via two broad perspectives: there’s the core business side of things, and then there’s the corporate action/capital allocation angle. I’d touched upon some of these issues in my previous article on VEDL; my big picture take was that whilst I liked the company’s diversified and low-cost expertise across various metals/commodities, I also felt that the cloud of uncertainty hovering around recent corporate actions, and a general lack of regard for minority shareholders could throw a spanner in the works. Alternatively, I’d also stated then that for technically minded investors, the risk-reward on the charts looked rather attractive for a long position.

Well, it’s only been about 3 months since my last article, but there have been quite a few new developments related to VEDL, and I thought I’d use this opportunity to keep interested investors abreast of some of these outcomes.

The recent open offer has been instrumental in driving the VEDL stock

Hitherto, VEDL has enjoyed a stellar run in 2021 (up by around 40%); whilst the prospects of commodities and metals have been looking up, VRL’s decision (the parent company) to acquire VEDL shares via an open offer has been one of the primary drivers for the share performance this year.

As mentioned in my previous article, VRL had failed to delist VEDL last year, and whilst there were suggestions that they would attempt to have another go in 2021, I expressed doubts over whether they would be able to successfully acquire all the shares due to the wide discrepancy in the valuation (key institutional shareholders such as LIC had offered to sell only at the rate of Rs.320 per share, almost 4x what VRL was offering at Rs.87.50 per share). Getting consensus is also particularly challenging when your shareholding structure is particularly

This article was written by

The Alpha Sieve profile picture
Investment research, primarily oriented towards uncelebrated/under-covered stocks and ETFs, across North America, Europe and Asia. Seeks to combine both fundamental and technical disciplines while making an investment/trading proposition.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (11)

Stellar results......Long VEDL.
any dividend update?
MS51 profile picture
Hindustan Zinc; 'integrated silver production was 203 MT, up 21% from a year' for this quarter.
A nice way to play Silver upside and basic metals.
@The Alpha Sieve - Stellar quarter from Hindustan Zinc (VEDL subsidiary).

Mr. Aggarwal should surprise market and bid much higher to take VEDL private.
VEDL juggernaut is on roll and it's only going to get more expensive as he waits.
The Fortune Teller profile picture
I really don't understand what is he waiting for.
Time certainly hasn't played to his benefit.
Had he offered $10 a year ago - the company would be his already
Had he offered $13 a month ago - the company would be his already
Now, he needs to offer $15+, and even that isn't certain
@The Fortune Teller - I guess 20+ now :)
We are already at $15.50
The Fortune Teller profile picture
Materials are on fire (seekingalpha.com/...) and a taking private seems like it's burning out...
MS51 profile picture
VEDL got the approval to start manufacturing India's very badly needed Oxygen at their shuttered Tuticorin Copper smelter. Though its for a short term, it might reverse the negative stigma caused by the smelter among the politicians and the locals.
India badly needs to restart its copper production to reduce it's copper imports. VEDL might get good Govt support in their quest for a new less polluting copper smelter.
Always liked the prospect of VEDL becoming the world's third largest Silver producer with their stated goal of 800 tones Silver within the next two years. They produced 610 tones in 2020.
The $15 PT comment substantiates (and approximates) my general trade thesis easy trek to $16 in Early Recovery Market conditions, Economies putting pressure on commodities, specifically Copper. GLTA
I have been looking for this level of details related to VEDL at the current situation - Thank you for the great article.

I see VEDL as a commodity ETF with really good potential.....except, management is hell bent on taking this company private.
Outstanding analysis. Again, this guy now sports one of the rare exemptions from my 80/20 Rule.
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