Vedanta delisting: Vedanta delisting failure: What brokerages say

MUMBAI: Vedanta’s focus is likely to turn to debt maturity, dividends, capital allocation and addressing corporate governance concerns after the failure of its delisting, said brokerages.

Investec has retained buy rating with a target price of Rs 162 and CLSA has maintained outperform while reducing target price to Rs 118 from Rs 133. CLSA said discussion around capital allocation will dominate investors concern instead of operational performance.

“While we expect the stock to react negatively in the near term, moving forward it will hinge on how management looks to ease debt at both Vedanta and VRL. An increase in inter-company loans could be negative for minority shareholders, while a high dividend payout would be perceived positively,” said CLSA. “Discussions around capital allocation issues will dominate investor concern instead of operational performance,” the brokerage said.

Shares of Vedanta were down over 18 per cent at Rs 99.8 at noon on Monday after the failure of the delisting offer.

The company’s promoter Vedanta Resources deemed the delisting offer to have failed after lower than required shares were offered.

Investec has retained buy rating on inexpensive valuations.

“Management’s ability to restore minority shareholders confidence is key to retaining / re-rating trading multiples. We find failed delisting is an additional scar, in addition to recurring CG (corporate governance) issues,” said Investec.

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