Brokerages’ View On What’s Next For Vedanta After Delisting Fails
Shares of Vedanta fell as much as 15% — the most since March this year — to Rs 103.6.
Analysts cut target prices for Vedanta Ltd. as they expect the stock to witness some selling pressure after delisting of the mining conglomerate failed.
The delisting offer is deemed to have failed as per terms of the delisting regulations, Vedanta had said in an exchange filing. A large number of unconfirmed bids and some technical glitches in the tender process are likely to have contributed to the failure of the delisting.
The post offer public announcement by the company said that 125.47 crore shares were validly tendered by public shareholders. The reverse book building process for public shareholders to tender their shares, which began on Oct. 5 had concluded on Friday.
As the analysts await more clarity on the company’s next move, CLSA suggested Vedanta may offer higher dividend payout, increase in inter-company loans and relaunch delisting process/open offer or business as usual.
Besides, governance advisory firm SES has urged the market regulator to come up with fool-proof robust delisting process as other companies such as Adani Power, Hexaware Tech and Allcargo Logistic queue up for delisting from the bourses.
Shares of Vedanta fell as much as 15% — the most since March this year — to Rs 103.6.
Here’s what brokerages have to say:
CLSA
- Maintains ‘outperform’ but cuts target price to Rs 118 apiece from Rs 133
- Concerns over capital allocation to overshadow operational performance
- Stock price hinges on next steps of promoters and management
Citi
- Maintains ‘buy’, lowers target price to Rs 130 apiece from Rs 150
- Delisting offer fails; awaits commentary on further action
- Clarity needed on when tendered shares will be available for sale
- Expects stock to correct in near term as some short-term positioning was likely event driver
- Correction to be exacerbated pending clarity on balance sheet uncertainty at Vedanta and Vedanta Resources
- Funds for delisting to be unwound
- Balance sheet and minority shareholders to put downward pressure
- Expects underlying fundamental and dividend support
Investec
- Maintains ‘buy’ and with target price at Rs 162 apiece
- Reverse-book building fails; focus to shift to debt maturity, dividends and corporate governance
- Vedanta continues to trade due to failure in delisting process
- Management’s ability to restore minority shareholders confidence is key to re-rating multiples