Vedanta poised for post-Covid world

protrade

Well-Known Member
#1
As we get news of imminent availability of COVID vaccine, investors need to start looking at sectors that will likely see a boost as the world comes out of the pandemic.

Clearly, basic materials and energy will see increasing demand with economic recovery around the world. I expect Vedanta to have a significant re-rating, in a post Corona world.

This company is priced attractively, has significant market position in multiple critical areas, is seeing lot of news flow starting to turn - like Zambia Copper judgement going in their favor, coal auctions, BPCL stake sale, etc.

Yes - the financial overleveraging of their parent is a matter for concern - but there’s lot of options available for Anil Agarwal to address this. Market was spooked about excess debt in Reliance - but the entire debt was addressed in a matter of months by financial engineering.

When you have quality assets, you can always get cash against them - whether as debt or equity. And all the assets Vedanta is picking up are high quality assets. BPCL acquisition is a no-brainer for a company with a proven track record of turning around state controlled companies, plus its a perfect vertical integration play to keep more margins inside the company.

Overall, this is a company that is massively undervalued and could easily see the kind of spike we saw in Reliance, with a potential doubling (or even more) of the stock.
 

protrade

Well-Known Member
#2
Fantastic rally in Vedanta over last 10 days, as predicted.

I would trim holdings of this stock around 129-130 levels. The upside from BPCL deal is largely priced in because Vedanta is the only serious operational buyer for BPCL at this point - however, the government may care more about financial bid - and with its current debt situation Vedanta may not be able to bid aggressively on a financial basis.

In any case, the stock has rallied almost 50% from its October low of ₹92.5 (including the ₹9.5 dividend), and its a great time to take a breather.
 

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