Opinion on Vedanta

The stock is hitting 52week low today on news that the copper plant in TN is up for sale. But, this plant has been shut for 4 years now, so it should already be priced in right? Please comment guys, I feel this is good time to add

Yeah…230-200 zone is great for value buy

Exactly, is there anything else going on that would cause such a plunge, apart from general global gloom? I really dont understand the sale rhetoric . It would be better for investors if an unused plant is sold and proceeds are reinvested in better projects or distributed as dividends right?

It could be something else, you never really know the reasons. Metals in general are falling quite strongly as well.

You need an edge before assuming that market is wrong, i have made that mistake many times in early days and averaged falling stocks, That works much better with Index or if you really really understand VEDL very well or if you have some mean reversion/value edge.

The dividend yield is 17% at the current market price. However please do read about the company promoters and the things the management and the promoter did during the peak of corona to delist the company.

Few of the unforgettable quotes of people were

the promoter steals from retail investor and does charity.
When someone asked why delist when the market price was around 87 odd, he said cash is king and he is giving an exit opportunity.
How blantantly he made provisions of 13000 crore to reduce the book value.
Gave loans from Vedanta to his Vedanta Resources
the directors did not follow their fiduciary duty of protecting the interest of the investors, instead towed the line of what the promoter wanted.
They have a dividend policy but does not pass on the hindustan zinc dividends to the shareholders Everyone knows what happened in copper plant.
During the delisting time, he owned only 51%.

Anyway, there is always karma and thank LIC that the delisting failed miserably.

Till this time, never realized that integrity of the owners was of paramount importance than the balance sheet and numbers before investing

Except for proxy advisors, not a single channel had the guts to ask the promoter why he was doing so many tricks to delist the company.

SEBI has now mandated that for any delisting, the board of directors should give an opinion instead of silently passing it for voting.

So in a nutshell, the owners integrity is questionable. Do read and make your own assessment.

Disclaimer: I was invested in Vedanta and went through a lot of pain during this period. Learnt how a delisting happens and need to thank LIC for making the delisting a failure.
This company is Toxic in all sense, the owners, the board of directors, the finance team including their banker - I think it is JP Morgan.

Also note most of the promoters shares of vedanta is pledged to banks including a portion of Hindustan zinc. Hope there is no margin call from these bankers on the owners.

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My thoughts:

  1. I would never recommend a stock below 200 days ema , how good the fundamentals maybe. Reason : Stocks trading way below 200ema takes a lot of time to recover even though how great everything else look. So it may take years before consolidation also you may not know how much it gonna fall , so averaging down have to be done.

  2. Buying stocks below 200 ema should only be done if you have deep conviction of its business and enough money to average down and enough patience to hold long term. As stocks trading way below 200 days ema takes long time before it consolidate to move up.

  3. Overall business wise its really good stock with good dividend yield and its Promotor-Anil Agarwal(51% holding) is hard core Shrewd industrialist he knows how to play the game that why its quite volatile stock.

Yeah i remember this now, very shitty move. But thankfully failed. I was not invested but still got angry.

Very valid comments here.

Still such a discount for a high div yield stock seems to make a lot of sense to me especially in a bearish marker. While Anil agarwal’s certain actions are definitely questionable, the company is very solid financially.

Most of stocks are below 200 EMA in a bear market so its time to pick the right value stock.

For what notion of “dividend”? The dividend that they gave last year? That is a very myopic view to take. Try seeing the average of (say) the last 5-years’ worth of dividends and see if the yield is still reasonable.

From what I remember, VEDL declares dividends only once in a while, not every year like some of the more respectable companies do. So dividend yield is not a sensible metric for VEDL.

ETA: I computed the average dividend that VEDL gave out over the last 5 completed FYs (FY 2017-18 to FY 2021-22), based on the data at TickerTape. Here is the summary:

  • Total dividend from FY 2017-18 to FY 2021-22: Rs.116.15
  • Average dividend for this period: Rs.23.23
  • Average dividend yield, based on yesterday’s closing price of Rs.230.45: 10.08%

This is not as bad as I thought. Also, as seen in the link above, VEDL did give dividends every year, though some years were very lean (e.g., FY 19-20 : Rs.3.90, and FY20-21: Rs.9.50).

Huh? I don’t really get your point. Their 5year average is 11.31, the highest in Nifty 100. So I am confused as to why you are negating your own arguement

He had cash flow issues in some other company, perhaps Hindustan zinc i don’t remember. That’s why he wanted to buy VEDL. That’s probably the reason for high dividend yield. Anyway, good luck.

VEDL is a very good company but in wrong hands.
Anil agarwal is not trustworthy, he can do anything & try to cheat investors. For me both Anil (ambani & agarwal ) are same, the only difference between then are assets they have.
for trading, VEDL is my favorite script, but for investing, i don’t like it, as management is’t trustworthy. I fully agreed with @neha1101 .
In a interview, RJ also pointed that, one should look at management not only balance sheet, He said that he has lost hundreds of crores in a2zinfra due to bad management.The video was from moneybees & is available on youtube.

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