This Quality Large Cap Stock Declines 46% From Its 52-Week High; To Announce 2nd Interim Dividend

Stock of Vedanta hit its 52-week high price of Rs. 440.75 per share on April 11, 2022 and in over 3 months have collapsed to last trade at Rs. 237.1 per share on the NSE. This is a steep decline of over 46%. Now we will here give a low down on why the stock has cracked sharply and is it a good time to buy the scrip.

Why the steep fall in Vedanta shares in the last few months?

Comparing the fall with the index of which the stock is the constituent i.e. Nifty metal, Vedanta has registered an even higher fall. For Nifty metals in the fall in the last 3 months has been over 24%.

Apart from the looming inflation and the recent decline in metal prices in global markets, Vedanta saw a significant impact in its share price after it invited bids for its copper smelter in Tamil Nadu. The deadline for the EoI as per the advertisement has been kept at July 4, 2022.

 

Other facets about the company

Promoters have pledged 99% of the company's equity for raising funds.

The company lately announced the acquisition of Athena Chhattisgarh Power which is a 1200MW coal-based power plant at Jhanjgir Champa district, Chhattisgarh, and is under liquidation process. The acquisition, which is estimated to be completed in FY23, will fulfill the power requirement at Vedanta aluminium business. The acquisition cost is Rs 564.67 crore.

Buy for a target of Rs. 490 by March 2023

JP Morgan has given an 'overweight' rating and has given a target price of Rs. 490 per share by March 23. The brokerage said that zinc inventories have declined to multi-decade lows and Vedanta remains best positioned to play higher LME zinc prices. It added that the downside risks include a sharp decline in LME aluminium and zinc prices, inter-company loans to the parent/transactions with the parent that are negative to minority shareholders; and further delays in oil PSC extension.

Vedanta to consider second interim dividend for fy23 on July 19, 2022

The diversified metals scrip led by Anil Agarwal is also slated to consider second interim dividend after the first hefty dividend pay out of Rs. 31.5 per share. The company in its exchange filing dated July 14 said, "he Board of Directors of the Company (the "Board") on Tuesday, July 19, 2022, will consider and approve Second Interim Dividend on equity shares, if any, for the Financial Year 2022-23. Please note that the record date for the purpose of determining the entitlement of the equity shareholders for the said dividend, if declared, is being fixed as Wednesday, July 27, 2022".