Vedanta - the calm before the storm

protrade

Well-Known Member
#1
The last few months have seen Vedanta take off nearly vertically, from a low near ₹95, to nearly ₹300! And in last few weeks, the stock has taken a breather, finding strong support near ₹250.

This consolidation above ₹250 looks like becoming the foundation for the next leg up in the stock.

The recent win by Anil Agarwal owned Twin Star, in acquiring assets of Videocon on the cheap, are unconnected to Vedanta - but they indicate that the risk to Vedanta from over leveraged promoter may be receding.

The coal blocks won by Vedanta in e-Auctions also addresses their own captive power and fuel needs in a powerful way.

This is a stock with attractive dividend yield, and it is trading at very low multiples. It’s stake of Hindustan Zinc alone manages to justify its current market cap!

One stock poised to perform well for the future.
 

Dr. Jan Itor

Well-Known Member
#2
"risk to Vedanta from over leveraged promoter may be receding" - Can you elaborate please? Entirety of promoter stake being pledged is a big red flag for me...
Btw long time sir ji... your threads are mentally stimulating...
 

brokenbull

Well-Known Member
#3
I trade all metal stocks daily (scale in /scale out in multiple small lots ) [HINDCOPPER,NMDC, SAIL,JINDAL,JSWL &vedanta etc).vedanta inline with nifty metal index or slightly underperformig. volatility wise hindcoper & nmdc good.
 

protrade

Well-Known Member
#4
"risk to Vedanta from over leveraged promoter may be receding" - Can you elaborate please? Entirety of promoter stake being pledged is a big red flag for me...
Btw long time sir ji... your threads are mentally stimulating...
Thanks for the nice words, Jan Itor!

The way pledges work, they start hurting a lot as stock slides down - and there is high risk of margin calls that can’t be met. As stock starts shooting up, this risk obviously recedes.

Secondly, Twin Star just won huge amounts of assets of Videocon, at a very cheap price. This makes the leverage situation of Anil Agarwal more comfortable.

Thirdly. Anil Agarwal has walked away from Anglo American 2 years back. It’s unlikely he will play that game anytime soon. Vedanta is getting huge dividends from Hindustan Zinc, and his entire attention shifted to taking Vedanta private - but obviously won’t happen cheap the way he was hoping earlier. My sense is that if it doesn’t happen cheap, Anil Agarwal won’t be interested in taking it private.
 

Dr. Jan Itor

Well-Known Member
#5
Also in a recent interview AA said that he wants to institutionalize/professionalize the company... he won't give it to his kin to be run as a family business... at least intent is there...
baaki in logo ka kya bharosa... Kapur sahab Yes Bank ko "diamonds to be held for ever" bolte hue, secretly usi time stake sale bhi kar rahe thhe gupchup se...
 

protrade

Well-Known Member
#6
I see lot of initiatives I like about Vedanta. Working with startups and funding them heavily in priority areas is a very attractive approach to solve serious industry problems, for instance.

This is a company in a “dirty” business. You can’t do much about that. But it is also in a critically important business. And we are at the starting stages of commodity super cycle.

I see some risks, where energy prices could collapse with increased focus on solar, etc. - but Vedanta will still do well, because of their strength in metals. The demand for metals will only increase exponentially over time.

Zinc and Aluminium will likely be the battery technologies of the future - because Lithium will not be available in large enough quantity, and because Zinc and Aluminium are far cheaper. Once the technology of Metal-Air batteries is perfected, it’s hard to see Lithium Ion continuing to be relevant.

I expect the issues around recharging metal air batteries at home to be addressed by swappable batteries. You just drive your car to a pit stop and a robot swaps out your spent battery for a fresh one. And the spent battery can be recharged or reprocessed as needed, with the right equipment and processes, in an industrial environment.

This sort of thing bodes very well for a player like Vedanta.
 
#7
Vedanta might have taken an off but currently it’s not performing that well. If you are in for such risk, you can go ahead with Vedanta, else invest in some other stock.
 

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