Vedanta Share Discussion Threads

[smurfy2001] 27/2/2018 16:54

Why Vedanta Is Best Placed To Gain From Commodity Surge



Billionaire Anil Agarwal’s oil-to-mining giant Vedanta Ltd. is in a sweet spot.

Prices of zinc are at their highest in more than a decade and aluminium is close to its highest in over five years, aided by China’s winter cuts to curb pollution. Crude oil has rebounded as well. The resources major is well positioned to gain from the commodity surge as it adds capacity in the three businesses that contribute the bulk of its operating profits.

Shares of Vedanta rose 22 percent in the last one year. The stock has the potential to gain another 20 percent, according to the consensus of estimates tracked by Bloomberg as of Feb. 21. All 24 analysts recommend a ‘Buy’.

The company is expanding capacity of its aluminium, oil & gas and zinc businesses, which will help it improve volumes in a deficit market, IIFL Institutional Equities said in a report. The three businesses, the brokerage said, are expected to contribute about 87 percent of the operating income in the year ending March 2019. Cost-saving measures are already helping it improve margins, it said.

Aluminium, oil & gas and zinc accounted for bulk of its Rs 5,270-crore earnings before interest and tax in the quarter ended December— zinc, lead and silver at 64 percent; oil & gas at 15 percent; and aluminium 8.6 percent, according to Bloomberg data. The company’s operating income, net profit and margins improved in the ongoing financial year.


Decade-High Zinc Prices
Chinese mining restrictions hurt supply, pushing up prices. That led to a higher realisation for Vedanta. LME Zinc is at its highest in a decade at about $3,550 a tonne. And it’s expected to rise further with depleting inventories, IIFL said.

Kotak Institutional Securities thinks zinc prices may have peaked and could fall. Yet, that’s unlikely to impact Vedanta’s zinc earnings because its subsidiaries Hindustan Zinc Ltd. and Gamsberg are expected to commission two large projects. Kotak said it could result in a strong volume growth of 40 percent to 1.6 million tonnes in two years.


Crude Rebound To Aid Margins
Crude has surged from about $47 a barrel in June last year to above $64. Higher prices directly boost operating margin for Cairn India, now merged with Vedanta Ltd. Cairn India also plans a $1.1 billion capex. That, Kotak said, is estimated to yield 218 million barrels of oil equivalent.


Aluminium Deficit
Shutdowns in China mean there will be a supply deficit in the medium term if production doesn’t resume, said IIFL. Aluminium prices though are off their recent peaks but have risen 15 percent to $2,200 a tonne in a year to trade near 2011 levels.

The Chinese government’s post-winter cut action will be key determinant for 2018 outlook, it said.

Volume growth and lower material costs, especially alumina, are expected to aid earnings growth of the aluminium business, according to the Kotak research report.

The recent Supreme Court verdict seeking fresh auctions of all iron-ore mines in Goa will not have much impact on Vedanta, IIFL said. Iron ore contributes about 2 percent of the company’s overall operating income.


Risks
The brokerage listed Vedanta’s foray in unrelated businesses as a key risk. The company announced a non-core investment of $158 million (Rs 1,000 crore) in Avanstrate Inc, a Japanese manufacturer of LCD glass substrate. It plans to set up a LCD panel plant, the brokerage said citing media reports.

Vedanta also emerged as the highest bidder (Rs 4,500 crore) for Electrosteel Steels, which has been referred for insolvency resolution, the Economic Times had reported.

[smurfy2001] 27/2/2018 16:50

Mining a must to pare imports, eradicate poverty: Vedanta's Anil Agrawal

[smurfy2001] 27/2/2018 16:02

Holding well on the 200 dayMA copper down 600pts.

[mustau] 27/2/2018 14:49

Only in our dreams,!!

[smurfy2001] 27/2/2018 14:47

I hope one day this does a PFG

[linton5] 27/2/2018 14:34

I see the Kaz machine has Anto in its sights now,only behind Rio,Blt and Aal 🌽🔨 I dare you

[smurfy2001] 26/2/2018 11:42

Punched through 200 dayMA.

[smurfy2001] 26/2/2018 09:48

Best not look at AAL as only Anil is laughing.

[mustau] 26/2/2018 09:44

Sickly looking at Aal.

[rampant_bull] 23/2/2018 16:54

Glen, AAL, kaz, all waving good bye to this. Why am I still holding this? I know as soon as I sell, the others will fall and this will rise.

[smurfy2001] 23/2/2018 14:55

So this is how much his company owns.

Conclave PTC Limited 271,802,858 £4,843,526,846.61

[smurfy2001] 23/2/2018 13:54

When will the chairman take profit on his AAL investment? I don't know how much profit he's got un-realised but he's doing rather well price wise.

Seems this is doing an inverse of AAL stock LOL.

[mustau] 23/2/2018 13:23

Ridiculous and shameful, management need to get their act and get price moving north.

[linton5] 23/2/2018 12:55

Kaz waving goodbye now in the distance to be honest never thought I’d ever see that one ☝️

[smurfy2001] 23/2/2018 11:44

News
20/02/2018 17:23 UKREG

Further dilution.

[smurfy2001] 22/2/2018 10:12

AAL get's it fair share of volatility but at least it's doing so much better.
1,726.80 GBX −69.80 (3.89%)

[mustau] 22/2/2018 08:09

Stonking results from Kaz, this will get left behind.

[mustau] 21/2/2018 18:43

Smurf - unfortunately I had a great opp to buy Aal around the 2 mark, gutted also. Fort I did get into Kaz and fxpo very near the bottom.

[smurfy2001] 21/2/2018 16:11

@mustau21 - The chairman saw more value in AAL then his own company. That's the sad fact. I missed out on AAL myself and gutted.

[mustau] 21/2/2018 16:03

No idea but I’d guess in within.

[linton5] 21/2/2018 16:02

It would be dysart for me but I was sure you wouldn’t know were that was lol

[mustau] 21/2/2018 16:00

Clacton-on-Sea for me!!

[linton5] 21/2/2018 15:58

We coulda been taking a flight to South Africa by now with our winnings,but I always fancied India for its food and beauty,gonna have to be Clydebank docks now 😩