Explained: Vedanta promoters set to buy 5% stake; Anil Singhvi decodes move, reveals how investors should react

Vedanta promoters are planning to increase their stake by as much as 5% through a block deal in the company today, Zee Business Managing Editor Anil Singhvi said. This will have a big impact on Vedanta share price and the Market Guru has provided investors with a strategy and explained what it actually means. 

Vedanta share price undervalued?
On Vedanta promoters buying a big stake in the company, the Market Guru said that they want to give a message that its stock is undervalued or at least available at attractive price. “This is interesting. The company trying to hint that the stock is undervalued at this level is quite contrary to their thought process which appeared while they were planning de-listing of the company from the stock exchanges. The price band of Rs 150 to Rs 160 appears fairly valued to the promoters of the company currently. And if that is the case what would be the good of valuation or higher range?” he asked  

वेदांता के शेयरहोल्डर जरूर देखें ये वीडियो...

प्रोमोटर ब्लॉक डील में खरीदेंगे करीब 5% हिस्सेदारी...

वेदांता के निवेशक अब क्या करें? जानिए अनिल सिंघवी से...#EditorsTake #Vedanta #StockMarket @AnilSinghvi_ pic.twitter.com/gL9YHQ5CRK

— Zee Business (@ZeeBusiness) December 24, 2020

LIC and Vedanta

Talking about this exercise, he said LIC, biggest stakeholders after promoters in Vedanta, considers Rs 320 as good value, so it is highly unlikely that the Indian state-owned insurance company will participate in this exercise. And in that case 5% stake required by the promoters will come from those individuals or funds who had bought the stock at much lower level before delisting news and correction after that.  

“This is almost certain that the promoters of Vedanta will get 5% stake that they are seeking today, but the company has formed a good strong support around Rs 130 to 135,” he said.
What should Vedanta investors do?

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Saying that it is very unlikely that the stock price will go back to Rs 90-Rs 95 when it had tanked during delisting news, Singhvi suggested long-term investors to stay put with their investment

in Vedanta. However, short term investors can book profit, said Zee Business Managing Editor.