Vedanta Resources is a diversified and integrated metals and mining group with annual sales of $1.9bn. Its principal operations are located in India, where it has a major market share in each of our main metals: aluminium, copper, zinc and lead. There are also substantial copper operations in Zambia and 2 copper mines in Australia.

            Red = 25 day moving average.           Green = 200 day moving average.

                        

Copper - (6 month graph)

SALES PER ACTIVITY (Data as of 31/03/2006)

Copper:      60%
Zinc:         24%
Aluminium:  12%
Others:       4%

Jefferies International today reaffirms its underperform investment rating on Vedanta Resources PLC (LON:VED) and raised its price target to 200p (from 150p).

Credit Suisse today reaffirms its underperform investment rating on Vedanta Resources PLC (LON:VED) and raised its price target to 250p (from 230p).

4th Quarter update http://www.moneyam.com/action/news/showArticle?id=5288831

Looks quite positive ...

FTSE 250 metals and mining company Vedanta Resources reported record annual production of aluminium, electricity, silver and Copper India cathodes in its fourth quarter production release on Monday morning.

The firm also revealed stable oil and gas production from Rajasthan for the quarter, mined metal production in line with guidance at Zinc India, strong production volumes for its Zinc International businesses, and continued strong production for the year at Copper Zambia.

"We are continuing to optimise production across our portfolio to generate maximum value in a low commodity price environment and remaining focussed on reducing costs to protect margins," said Vedanta Resources CEO Tom Albanese.

Good time to pile in on Vedanta... sp moving up

.

Incredible turnaround in the sp.

Not been following mining stocks, are the others up as well?

Most have been rising over the last 4 months. Brokers now think that they are overvalued, but who knows? Mining stocks are mostly cyclical, so just depends on whether you think the bottom has been and gone.

StockMarketWire.com
After-tax profits at Hindustan Zinc - a subsidiary of Vedanta Resources - were virtually flat at Rs8,167Crore in the year to the end of March (2015: Rs8,178Crore).

Revenues were 8% lower at Rs10,158Crore despite record annual integrated zinc, lead and silver production - up 5%, 33% and 58% respectively.

Mined metal production in line with guidance, marginally higher than FY 2015.

Net zinc metal cost per MT before royalty was Rs. 52,646 ($804), which is 8% lower in dollar terms and marginally lower in rupee terms due to higher volumes of integrated production, better smelter efficiencies, lower coal & commodity costs, partly offset by lower average grades due to change in mining mix and higher mine development. Looking at the recent commodity price downturn, the company has re-negotiated several contracts to optimize costs and expect this to translate into significant savings in FY 2017.

Ever since Fred gave me the tip-off about Ved. more then 10 or so years ago they have never let me down, The fact they seem to have quite a wide variety of metals mined and also some nuclear interest if I'm not mistaken gives them quite a spread of interests.

They are also based in India which like China are an emerging consumer economy, they pay a dividend as well.

Appointment of Non-Executive Director
Vedanta Resources Plc ("Vedanta") today announces that Mr Ravi Rajagopal has been appointed as a Non-Executive Director with effect from 1st July 2016. He will also be a member of the Audit Committee.

Mr. Ravi Rajagopal joined Diageo plc in 1997, where he worked in various roles until 2015. He was the Global Head of Business Development of Diageo plc from July 2010. His other roles included CFO for Europe and Group Financial Controller. Prior to joining Diageo plc, Mr. Ravi Rajagopal worked with ITC India (a BAT plc subsidiary in India) where he also held a variety of senior positions both in finance and general management. He is also a Non-Executive Director of United Spirits Limited, India.

Mr Euan Macdonald has decided to step down from the Board following the conclusion of the Company's 2016 Annual General Meeting having served as a Non-Executive Director for eleven years.

Mr Aman Mehta has agreed to continue for a further one year on the request of the Board following a recommendation from the Nomination Committee. The Nomination Committee will continue reviewing the composition and membership of the Board.

Preliminary Results for the Year Ended 31 March 2016
Financial Highlights
n Revenue of US$10.7 billion and EBITDA(1) of US$2.3 billion, lower than FY2015 primarily due to lower commodity prices (FY2015 Revenue: US$12.9 billion, FY2015 EBITDA: US$3.7 billion)
* Adjusted EBITDA margin(2) of 28% (FY2015: 38%), driven by low commodity prices
* Free cash flow(3) of US$1.7 billion, up 63% (FY2015 US$1.0 billion), driven by optimisation of operational, capital expenditure and working capital initiatives
* Net debt reduced by US$1.1 billion and gross debt reduced by US$0.4 billion during the year
* Underlying (loss) per share(4) of (131.9) US cents (FY2015: (14.2) US cents)
* Basic loss per share of (665.8) US cents primarily due to a non-cash impairment of US$3.3 billion (net of tax) and lower EBITDA, reflecting lower commodity prices
* Covenant modifications on bank loans at Vedanta Resources plc secured until the period ending 30 September 2018 and complied with as on 31 March 2016
* S&P downgraded issuer credit rating from 'BB' to 'B' and Moody's downgraded its corporate family rating from 'Ba1' to 'B2' due to weak commodity prices
- S&P subsequently revised the outlook to 'Stable' in April 2016

* Hindustan Zinc Limited announced its highest ever special dividend in Q4 (c. US$1.8 billion including dividend distribution tax)
* Final dividend of 30 US cents per share
* Simplification of the group structure continues to be a priority
Business Highlights
* Record production of zinc, lead and silver at Zinc - India; aluminium, power and copper cathodes at Copper - India
* Commenced ramp-up of capacities at Aluminium, Power and Iron Ore divisions
* Entire power portfolio of 9,000 MW now operational
* Successful implementation of Mangala Enhanced Oil Recovery Program
* Recommenced production at Goa iron ore operations, achieved exit run rate production of 0.8 million tonnes per month
* Strong cost performance, with lower cost of production across all businesses; cost savings of c.US$325 million delivered in the year

Anil Agarwal, Chairman of Vedanta Resources Plc, commented: "Vedanta demonstrated resilience this year, delivering healthy EBITDA margin, strong free cash flow and lower gross & net debt in a volatile commodities market. We achieved record production in zinc, lead, silver at Zinc India; Aluminium, Power and Copper cathodes. There is a huge opportunity for Vedanta to support India's future resources demand, which we are well placed to seize with our combination of low cost and well-invested assets. We look to the future with cautious optimism."

rose (red) coloured specs .... 10 year chart shows a pretty sad performance

Barclays note today:
"· Vedanta reported EBITDA of $2336m, 2% ahead of our estimate and +4% vs. consensus. EBITDA declined –18% HoH in H2 and was down –38% YoY for the FY. Underlying PAT pre-minorities was -$29m vs. our estimate of +$1m. Due to the volatile minority line, underlying EPS was -$1.32 vs. our -$0.59 estimate and 19% below consensus (-$1.1). Surprisingly the company reinstated a final dividend of 30c/sh ($83m).

· Net debt: Importantly this fell to $7.329bn at March-16 vs. $7.5bn at Sept-15 and our estimate of $7.526bn. The drivers of the reduction were working capital inflow of $136m in H2, building on the inflow of $1030m in H1, plus significantly lower capex (H1: $651m, H2: $310m). However, ~50% of the $826m debtor/creditor inflow for the FY is expected to reverse in FY17. ND/EBITDA as a result was 3.14x LTM basis, vs. 2.58x reported in September. Using H2 EBITDA annualized, ND/EBITDA was 3.49x. The group’s covenants have been raised to 4x until March-17, declining to 2.75x by March-19. The company has $3.8bn maturing this year (2.5x market cap), of which $1.5bn is at PLC ($0.9bn already repaid by VEDL) and $2.3bn at the subsidiaries (yet to be refinanced).

· Guidance changes: Key elements pre-announced via subs reporting – see summary table below. Highlights include FY17 capex at Cairn cut to $100m (vs. $500m) but with production expected to remain broadly flat. Gamsberg FY17 capex $200m (vs. previously $60-100m). Zinc India $300m, opex stable (higher in H1) and marginally higher production. Ali/Power $400m. Overall FY17 growth capex expected at $1.0bn in line with prior $1bn.

· Impairments: As reported by the subs, Vedanta PLC reported a total impairment of $5.2bn pre-tax, including oil & gas assets and goodwill ($4.9bn), with the balance iron ore in Liberia and others.

· Key new number is KCM: with ~100% of EBITDA already released via the subs reporting, KCM (EBITDA –ve) is the only new operational data in the release. FY16 EBITDA was -$18m vs. our estimated -$30m. FY cash cost $1.975/lb vs. in H1 $2.10/lb. Q3 was $1.75/lb and Q4 $1.95/lb – the increase is due to power tariffs.

· Valuation not supportive: Spot PERs 303x and 20.7x 2016-17E, spot EV/EBITDA 7.5x and 6.5x 2016-17E, attributable FCF yield -6.9% and +13.0%.

Indian-based mining group Vedanta Resources has taken the “prudent” move to cut its dividend by more than half, as low commodity prices and a vast impairment in its oil and gas business pushed it to a loss.

The FTSE 250 company, which specialises in zinc but also produces copper and iron ore as well as oil and gas, cut its final dividend to 30 cents a share from 63 cents last year.

Vedanta reported a pre-tax loss of $4.98bn (£3.45bn) for the year to March 31. This was an improvement on the previous year, when it fell to a $5.6bn loss. Revenue fell from $12.88bn to $10.74bn.

Barclays note:
"Vedanta is turning a corner of sorts. Its maturity profile now looks manageable, and we expect net debt/EBITDA to decline in FY17 albeit due to EBITDA rising rather than net debt declining. The company’s principal commodity exposures, zinc and oil (56% of FY17 EBITDA), should offer some potential for upside. Some valuation metrics are starting to look interesting too with EV/EBITDA at 6.2x and 4.5x in CY16-17 while FCF/EV is 5% and 11%, respectively. That said, there is limited downside protection to the equity should commodity prices fall, on our estimates. Our spot NPV and SOTP both indicate negative equity values, in line with Vedanta’s negative book value just reported for March-16. Hence, we remain UW for now.
Refi remains a risk but now more manageable: Vedanta remains dependent on bank/bond markets to continue its refinancing program. While it has been successful so far, there are signs it is becoming trickier. The company has resorted to paying $1.8bn dividends from HZL in April (in the process losing $844m in withholding tax and minority payments) and factoring working capital (creditor days now 255). However, maturities over the next three years now stand at $10.9bn compared with cash and undrawn facilities of $10bn and cumulative FCF of $3.6bn post minorities.
Net debt likely to rise in FY17 but ratios coming down: We struggle to see how net debt will come down in FY17 in the absence of higher commodity prices, given the $844m HZL outflow, PLC dividend of $83m, higher capex and ~$400m working capital outflow as per guidance. However, due to higher oil and zinc prices plus some modest volume growth driving EBITDA up, we see net debt/EBITDA declining to 2.8x in FY17 (from 3.1x in FY16), well within the revised covenants of 4x. That gives some scope, if required, to add a cash top-up beyond the $117m current offer to the Cairn minorities.
Investment case needs higher prices for key commodities: Ultimately Vedanta needs higher prices to see its equity re-rate – our NPV is negative on spot, as is the company’s March-16 book value and SOTP (Figure 32). We think higher prices are likely for its two principal commodities zinc and oil (captured in our forecasts). However, until the company takes more meaningful steps to reduce debt, eliminate structural complexity and unlock ‘latent capacity’, the stock remains too risky for us so we retain our UW rating."

Goldman Sachs today initiates coverage of Vedanta Resources PLC (LON:VED) with a neutral investment rating and price target of 400p.

We initiate on Vedanta with a Neutral rating and a 12-month price target of 400p. Vedanta has a portfolio of attractive assets (zinc/power/oil). However, the key challenge remains significant debt pressure – exacerbated by recent lower commodity prices. The company has c.US$1.3 bn/year of maturities over the next 4 years – for which we estimate FCF generation and cash at subsidiaries is sufficient. However, if commodity prices slide further or if the company faces issues in upstreaming cash from its subsidiaries (particularly Cairn and Hindustan Zinc) it could entail fund raising and as such hamper the investment case.

Citigroup note today:
"A difficult equity story to sell
Group structure complexity and high leverage still dominate Vedanta’s investment case and equally act as deterrents to a number of investors. We see four things that could turn the dial for Vedanta (group structure simplification, deleverage, KCM delivery and integrated aluminium business), but the road to delivery of all of these looks long and bumpy. Following a period of restriction, we resume coverage at Neutral/High Risk with a £4.40 TP.

It can’t ever be that simple
A big minority line from Vedanta Ltd will always remain even if the group manages to buy all other minorities. Moreover, investors with a global mandate have an option to avoid the holding company debt/discount and KCM/Zambia risk, meaning that the group risks competing for capital/investors with its own subsidiaries. Moreover, valuation disconnects between the holding and subsidiary companies can increase the vulnerability of the higher-rated name as investors try to tap into arbitrage opportunities.

What changes with Cairn merger?
Due to completion timing uncertainty, dominant minority shareholding and reversal of the bid premium, we don’t factor the proposed Cairn India merger into our base case. We estimate a merger on current terms would reduce VED’s earnings and NPV by a double-digit % as the gain from higher effective ownership of Cairn India (from 37.7% to 50.1%) would be more than offset by lower effective ownership of all other businesses under VED Ltd as Plc’s stake would be diluted to 50.1% (from 62.9% currently) under current merger terms.

Key changes to our model
We update our model for the FY16 results and also incorporate Citi’s current commodity and fx estimates. Significantly lower commodity prices since our last publication have resulted in double-digit downgrades to our EPS estimates from FY18 onwards while our FY17 EPS estimate has turned to a negative 52.6c from +48.4c previously due to a lower base. Our NPV has, however, declined only marginally to £16.2/share from £16.7/share due to roll-forward. Our price target (based on NPV and EV/EBITDA valuation methods) declines to £4.40/share from £5.50/share, primarily on significantly lower EBITDA."

Credit Suisse today reaffirms its underperform investment rating on Vedanta Resources PLC (LON:VED) and raised its price target to 300p (from 250p).