Vedanta - Promoters to buy 5% more in April 2021?

In this section on 24-11-2020, we have mentioned that delisting failure of Vedanta was a calculated move, to make promoters use money for other better use. This has partly proved right to see promoters having bought 18.50 crore shares of Vedanta, being 4.98% stake, on 24-12-2020, at Rs. 160 per share, to raise their stake to 55.11%.

Insiders are saying that the plans of acquiring strategic control of BPCL by the company is on the cards, for which necessary funds are being tied up by Vedanta. It is also speculated that Vedanta will be the flagship company of the group, in which Hind Zinc may also get merged, once the 29.50% stake held by the Govt. Of India in Hind Zinc, gets acquired by Vedanta, may be in first half of year 2021.

In view of Vedanta seen becoming a natural resource and non ferrous metal giant, with presence in Crude, Iron Ore, Zinc, Lead, Silver, Aluminium, Copper, as also, Oil Marketing Company (post BPCL acquisition) valuation of the company will take a quantunm jump. Hence, we may see promoter raising their stake in the company by another 5%, to over 60% in FY 2021-22, with an eventual aim to raise it to 75%, maybe, with Warrant issue or merger of Hind Zinc.

This gives clear roadmap of growth for Vedanta, which is capable to post an annual PAT of Rs. 24,000 crore, excluding share of minority interests. This break up is seen at Rs. 10K crore of Hind Zinc (100% stake) Rs. 7.5k crore of BPCL (75% stake) and Rs. 6.5k crore of Aluminium, Oil and Iron Ore business. These estimates may be taken for FY 22-23, considering 15 months to be required to complete M&A.