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 promptly took a drubbing! So any further stake selling by the promoter is not really an option for want of any takers, But therein lies the opportunity. Vedanta, as already proposed by the Co. recently, (link attached below) will have to be split up into many focussed commodity specific smaller companies & sell controlling stakes in a couple of them to raise any meaningful capital that could take care of the stretched balance sheet. The Co. is sitting on a number of prized assets which would find numerous takers if the current promoters are out of the equation! That seems to be the only possible way out for the promoters to get out of this debt trap.
If that were to happen there could be substantial gains for investors to be made over the next 12 months or so. The current price levels of about 215 appears reasonable to enter, but the basic investment thesis assumes that the demergers will go through.
(For some reason there seems to be two threads for Vedanta)
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