Buy Vedanta; target of Rs 530: ICICI Direct

ICICI Direct's research report on Vedanta

Vedanta (VEDL), with its bid amount of ~INR 170bn (staggered over 5 years), has reportedly (Link) emerged as the highest bidder for acquiring the assets of Jaiprakash Associate (JAL). We understand that VEDL needs to secure a few statutory approvals (CCI, NCLT, etc.), which we believe may take 3–6 months. Upon receiving the necessary approvals, VEDL would need to make an upfront payment of INR 37–38bn; payment of the balance shall be spread over the next five years thereon.

Outlook

The development is rather unexpected, since JAL’s businesses are non-core to VEDL’s current portfolio. At this juncture, we are note incorporating anything since we require further insights. We maintain BUY and our SoTP-based target price of INR 530.

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