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    Bullish on Vedanta story, expect stock price to appreciate 30-40% within a year: Sudip Bandyopadhyay

    Synopsis

    Vedanta, a unique company with diverse commodities, is well-positioned in the commodity cycle. Sudip Bandyopadhyay sees deep value in Vedanta and expects 30-40% appreciation in one year. The demerger, upcoming Tuticorin plant, and entry into power distribution contribute to its promising future.

    Sudip Bandyopadhyay, Inditrade Capital-1200ETMarkets.com
    Sudip Bandyopadhyay, Group Chairman, Inditrade Capital, says “Vedanta is a unique company. They have a basket of commodity and commodity production which is unique. They are the largest aluminium producer in the country with 45% domestic market share. They are the largest zinc producer with 80% domestic market share. They are the largest oil producer in the private sector in India. They are one of the largest exporters of iron ore from India. They are one of the largest custom smelters they have in India for copper. They are also poised to be the second largest private player in the power sector. So, they are very well positioned in this entire commodity cycle and I would be watching Vedanta keenly.”

    The Vedanta management is tackling the debt issue at the parent level very intelligently and it appears that that seems to have become a priority. First, we saw repricing, restructuring of debt. We saw a demerger. Now, we are hearing that even some promoter stake sales are happening, some blocks are happening and the idea is to urgently retire debt and restructure it. Do you see deep value in Vedanta right now?
    Sudip Bandyopadhyay: Absolutely. Beyond what you mentioned, the most important thing to my mind is the entire commodity segment is getting into a good zone. China probably has no other way out than incentivising production and manufacturing in the domestic market. And if that happens, global metal prices will see new highs.

    Even now, as we speak, the commodities are in a good spot. And remember, Vedanta is a unique company. They have a basket of commodity and commodity production which is unique. They are the largest aluminium producer in the country with 45% domestic market share. They are the largest zinc producer with 80% domestic market share. They are the largest oil producer in the private sector in India. They are one of the largest exporters of iron ore from India. They are one of the largest custom smelters they have in India for copper. They are also poised to be the second largest private player in the power sector.

    So, they are very well positioned in this entire commodity cycle and I would be watching Vedanta keenly. Also, remember a couple of things. One is the unlocking of value through this demerger. Now there are five-six separate companies with very clear focus and it will be very easy for investors now to look at these individual companies and choose to invest.

    Of course, it will be easier for the promoters also to disinvest or reduce their holding in these segregated companies once they come into being, after the process is over. So, this is again a good move. The Tuticorin plant probably will start soon and that is going to be again a boon for Vedanta. Overall, we are extremely positive. Financial performance has been good. The cost reduction exercise which they have carried out has started bearing fruit. So, on the whole, Vedanta is in a very good position and valuation wise also it has not moved up as much as many other peers or not really comparable, but the metal sector companies have moved up.

    Specifically, how much value do you think long-term investors can look at, purely looking at how the operational numbers were pretty strong and also if they go ahead and demerge the businesses, where in the next one- to two years can value unlocking take the price?
    Sudip Bandyopadhyay:, I am definitely looking at a 30% to 40% appreciation within a one-year time span because the way the metal or the commodity cycle is positioned now, I definitely see the commodity players benefitting.

    In Vedanta, there are a clutch of commodities. Vedanta has a unique portfolio and all of these will benefit significantly. Also, remember, incremental capex is happening on alumina and zinc side. So, this is definitely going to help the company going forward, at least the individual companies once they are broken up, but as a Vedanta shareholder I will get one share of all these other five companies as well, so that is a good opportunity for the shareholder.

    Also, disinvestment most probably will come in steel and iron ore assets which would unlock incremental cash flows and value. So, overall, they are getting into power distribution and that again is a good area to get into as things stand today. I am pretty bullish on the Vedanta story and Vedanta stock at this stage.


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    (You can now subscribe to our ETMarkets WhatsApp channel)

    (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2024 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

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