Promoters to increase stakes in Vedanta by 4.57%; what it means for investors? Anil Singhvi explains, revises target

Vedanta stocks witnessed spurt in volume by more than 30.89 times in Tuesday's intraday trade as shared jumped over 5 per cent after media reports suggested that the company's promoters were planning to increase their stakes in the mining company.  

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Stocks of Vedanta Limited surged to day's high of Rs 354 per share on BSE in the early intraday trade on Monday. The stocks were trading with a gain of Rs 13.25 or 4.03% at Rs 341.80 after the media reports suggested that Twin Star Holdings and Vedanta Netherlands Investments BV, the promoter companies of Vedanta, will be purchasing around 170 million shares at an offer price of Rs 350 per share.

Zee Business Managing Editor Anil Singhvi on Tuesday said that it is an interesting development as the company has offered delisting price of Rs 87.25 per share in October 2020. Later, it was revised by the company, which also failed. "The price of the stock has increased four times to around Rs 350 per share now. As the price of the stock has grown manifold since the initial delisting price, this approach by company's promoters hints that Vedanta's delisting may not be entirely shelved off," he added.  

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Singhvi said this also means that there is still good scope for investors to make money from this stock on current valuations. "The company has so far increased stake from 50.14% to 65.18% during this period on two different occasions. Now, if the company wants to buy its shares soon after restructuring at an offer price of Rs 350 per share, this suggests two things. One that company still thinks there is good upside left in the stock from current levels in near future. Also, since the promoters' stake will go up to nearly 70% after 4.57% hike, it also indicates that the company might be mulling the idea of delisting again," pointed out Zee Business Managing Editor.  

He said amidst everything one thing is clear that if promoters of Vedanta think current stock prices are reasonable, long-term investors still have value left in Vedanta. "I am also revising my target, which was of Rs 375 to Rs 400 per share, to Rs 450 to Rs 500 per share now. But one has to keep Iin mind that this target will not be achieved immediately and we also see some profit booking at upper levels post this news. This is a very positive development and investors should accumulate at every big fall, while short-term traders can book profit," concluded Singhvi.  

(Disclaimer: The views/suggestions/advices expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)