Reserves is part of EQUITY in LIABILITIES side of the Balance sheet. Liabilities side on the balance sheet shows how the assets are funded.

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The primary motive of private equity promoters is to generate returns for their investors. They do this by acquiring companies, improving their performance, and then selling them for a profit or investing in seed/early/late stage and riding the wave. Private equity promoters typically have a long-term investment horizon, starting from 3-5 years. The company is run by a professional management, so we need not worry.

Hi Ranvir, Could it be the market perception of not so perfect Corp governance?
Historically Reliance has always traded at a EV/EBIDTA multiple of around 11; it had gone up post the liquidity boom post pandemic which seems to have corrected now.

Refining business seems to be taking a hit across entire industry maybe due to the ongoing geo political conflicts… Afterall India is dependent on outside oil to refine.

Check BPCL’s recent quarterly results… its now trading at 2.3 EV/EBITDA

So how does one play the Vedanta story from here?

It’s a given that the promoter Anil Agarwal does not hold minority shareholder interest anywhere close to his heart. The hefty dividends paid were due to the promoter’s need for cash to service the debt. It is also a given that no meaningful investor will invest in the Company in its current avatar. The Company did sell some stake in the recent past n the share price took a drubbing, but therein lies the opportunity. Vedanta will be split up into many companies to sell controlling interests in a couple of them. The Co. is sitting on prized assets for which there would be numerous takers if the current promoter is out of the equation!

The only possible way out for the promoters to get out of this debt trap could be selling strategic controlling stakes in the companies being spun off. If that were to happen there could be substantial gains to be made over the next 12 months or so. The current price levels of about 215 appears to reasonable to enter, but the basic investment thesis assumes that the demergers will go through.