Neutral Vedanta; target of Rs 114: Motilal Oswal

Motilal Oswal 's research report on Vedanta

In a Special Resolution by postal ballot, 93.3% of all shareholders and 84.3% of public shareholders have approved to delist the shares of Vedanta (VEDL). As ensuing steps, VEDL would announce a reverse book building process for shareholders to tender the shares, resulting in the discovery of the final exit offer price. Earlier, on 12th May, the promoter group (led by Vedanta Resources Plc) had shared an Indicative Offer Price (IOP) of INR87.5/share. This implies a ~21% discount to CMP and ~41% discount to the FY20 book value per share. Price discovery is thus likely to happen at a higher level. We value VEDL at an SOTP-based target price of INR114/sh, built on the expectation of a volume uptick in the Zinc and Oil & Gas businesses as well as 5–10% higher commodity prices than currently prevailing. Maintain Neutral.

Outlook

We value Vedanta on an SOTP basis to arrive at a target price of INR114/sh. Maintain Neutral.