25 June 2020
Company Update | Sector: Metals
Vedanta
Neutral
BSE SENSEX
34,842
S&P CNX
10,289
CMP: INR111
TP: INR114 (+2%)
One step closer to delisting
Motilal Oswal values your support in the
Asiamoney Brokers Poll 2020 for India
Research, Sales and Trading team.
We
request your ballot.
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
VEDL IN
3,717
413.7 / 5.4
180 / 60
11/-9/-23
2377
49.9
Financials & Valuations (INR b)
Y/E MARCH
2020E 2021E 2022E
Sales
EBITDA
Adj. PAT
EBITDA Margin (%)
Cons. Adj. EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
Ratios
Net D:E
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA(x)
Div. Yield (%)
FCF Yield (%)
*Attributable EBITDA
Shareholding pattern (%)
As On
Mar-20 Dec-19
Promoter
50.1
50.1
DII
18.8
18.6
FII
15.6
16.8
Others
15.5
14.4
FII Includes depository receipts
Mar-19
50.1
18.7
16.9
14.3
12.7
0.8
5.4
3.5
31.6
19.5
0.8
6.7
12.8
22.3
8.8
0.8
4.5
13.8
22.9
0.7
5.6
8.4
53.4
0.8
4.0
7.1
298.5
0.7
9.3
10.7
144.7
831.7
194.1
32.6
23.3
8.8
-52.7
146.9
735.2
163.1
21.2
22.2
5.7
-35.1
137.1
853.7
216.9
47.1
25.4
12.7
122.4
134.1
84.3% of public shareholders vote in favor of delisting
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.
th
Earlier, on 12 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.
Shareholders approve Special Resolution on delisting
The shareholders of Vedanta Ltd accorded their approval to the Special
Resolution passed by the Board of Directors of Vedanta Ltd on 18
th
May,
2020 to delist the shares of Vedanta Ltd.
The Special Resolution was approved with 93.34% of votes in favor of the
resolution and only 6.66% of votes in dissent. Among the public
shareholders, 84.3% of votes were in favor of the resolution, against the
statutory requirement of 66.66%.
This is an approval to proceed with the Delisting Offer and is not a decision
on the final exit offer price.
Roadmap ahead – Delisting process
Letter of Offer:
VEDL shall now make a public announcement and dispatch
the Letter of Offer, along with a bid form, to Public Shareholders.
Bidding Period:
The Bidding Period shall commence within seven working
days of the public announcement and shall remain open for five working
days. Shareholders may tender their bids within the Bidding Period.
Discovery of final price:
The price at which Equity Shares through eligible
bids take promoter holdings to 90% of paid-up equity capital would be
determined as the final exit price.
Option to accept/reject offer or make counter-offer:
Upon the discovery of
the final exit offer price, the promoter group would have the option to
either accept or reject the final exit offer price. In case the final exit offer
price is not acceptable to the promoter group, it could make a counter-offer
within two working days
from the discovery of the final exit offer price.
Amit Murarka - Research analyst
(Amit.Murarka@motilaloswal.com) +91 22 6129 1538
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.