Vedanta Says It Won’t Change Company Structure, Shares Gain 2%; Clsa maintains its “outperformance”

Shares of Vedanta Ltd were in focus on Wednesday after the metal major said on Tuesday it had rejected plans to reorganize its corporate structure, after completing its review of the reorganization.

As of 12:15 p.m., shares of Vedanta were trading at Rs 371.15, up 1.55 points, or 0.42% higher on BSE. The stock rose 2% earlier in the day.

According to Vedanta’s filing to the exchanges, “The company has concluded this comprehensive review with input from various experts and advisors. The board of directors concludes that the current structure is optimal and commensurate with the current size and its diverse businesses. .

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Vedanta had in November last year decided to undertake a review of the company’s corporate structure and assess a range of options, including spin-off or demerger of its existing business.

The regulatory filing also indicated that Vedanta would distribute a minimum of 30% of after-tax attributable profit (excluding HZL profits) as dividends.

Vedanta has further informed exchanges that its capital allocation policy will be based on “consistent, disciplined and balanced” capital allocation with long-term balance sheet management. The company will maintain the optimal leverage ratio (net debt/EBITDA) at a consolidated level, he said.

JPMorgan upgraded its rating on Vedanta shares from ‘overweight’ to ‘neutral’ and raised its price target from Rs 375 to Rs 465. The multiple positive moves announced by the company justify the revaluation of the increase target multiple to 4x FY23E EV/EBITDA compared to the previous multiple of 3.2 times, the brokerage said.

CLSA maintained its “outperform” rating on Vedanta shares with a target price of Rs 350. The brokerage said it would seek more color on a few other investor concerns.

First post: STI