Anil Agarwal-led Vedanta Ltd saw its share value tumble 3.3% to trade at Rs 176 apiece days soon after the promoter group announced an open give to enhance its stake by 10% in the commodities giant. Promoter Vedanta Resources Ltd informed bourses on Saturday of a voluntary open give for the acquisition of up to 37.17 crore equity shares collectively with Twin Star Holdings Ltd, Vedanta Holdings Mauritius Ltd, and Vedanta Holdings Mauritius II Ltd — all indirect subsidiaries of Vedanta Resources. However, the give value of Rs 160 per share, at a discount to the present market place value, has been termed as ‘poor’.
Towards delisting or optimism on commodity costs?
The move to enhance shareholding comes weeks soon after the promoter group purchased 4.98% stake from the open market place at Rs 150-160 per share. “We see Vedanta’s open offer to buy ~10% stake as a step towards another attempt at delisting,” brokerage and investigation firm Motilal Oswal stated in a note. If the give goes by way of, Vedanta’s promoters will enhance their stake in the firm to ~65%, according to the note. Some analysts do see the try to enhance stake as the firm’s optimism about the commodity value cycle.
: Vedanta shares surge 13%, hit 52-week higher as promoters make bid to scoop up shares from open market place
For the give, Vedanta Resources along with its subsidiaries would have to shell out Rs 5,950 crore. The firm stated that it has sufficient monetary sources to meet the obligations and have produced firm monetary arrangements for financing the acquisition of the equity shares tendered in the Open Offer. Earlier, final month, the promoter group had raised $ 1 billion at 13.86% by promoting notes due in 2024 in the market place. Along with that, the complete promoter holding of the Vedanta has also been pledged. Vedanta Resources, the promoter, has a net debt of $ 7 billion and has debt maturities of $ 2.5 billion till June 2022, Motilal Oswal stated.
Attractive dividend play?
Since the starting of November, shares of Vedanta Limited have surged more than 80%. This tends to make analysts at Edelweiss Securities think that there is small area for additional upside.
“We are downgrading Vedanta to ‘HOLD/SP’ as the stock has achieved our fair value of Rs 170. In light of the unattractive open offer price of Rs 160 apiece, we believe upside potential is limited despite our positive view on the commodity cycle,” they stated.
However, regardless of this, the brokerage firm finds Vedanta a dividend play. “The promoter group’s increased indebtedness to fund the share purchase of Vedanta would lead to higher cash needs. Hence, we expect VEDL’s dividend yield to sustain within 8–10%,” they added. Edelweiss does, nonetheless, count on the stock to endure from the promoter group’s continual endeavours to enhance their stake in the firm.