Ritesh Shah of Espirito Santo Securities told CNBC-TV18, "Sesa-Sterlite merger offers a lot more breathing space to the management going forward. Specifically given it solves the cash fungibility issue. If you look at the cash flow so far, the management has walked a tight rope with the funding gap clearly being met by the dividends from Hindustan Zinc and Cairn India. Once the transaction goes through in a couple of months, you will have access to nearly USD 1 billion plus of Hindustan Zinc's free cash flows, which will ease out cash flow situation for the company."
"We have recently upgraded our stock call from neutral to buy clearly as we expect the transaction to go through. Our fair value stands at Rs 180 factoring USD-INR at 60. If one factors in USD-INR at 10 percent depreciated value say at 65, our fair value increases by Rs 40 so it takes it to Rs 220. Clearly it remains our top pick in non-ferrous sector right now."
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