Edelweiss' research report on Vedanta
We view Vedanta’s (VEDL) acquisition of Electrosteel Steels (ELSS) as value accretive in the near term as: i) EV/t of USD546 is significantly lower compared to recent transactions; ii) EBITDA/t accretion potential via captive iron ore use & capacity ramp up; and iii) opportunity to expand beyond 2.51mtpa.
Outlook
We see additional benefits of economies of scale if VEDL decides to expand the plant further as it has sufficient iron ore capacity in Jharkhand to support a 5mtpa plant. We maintain ‘BUY/SO’ with TP of INR425 on FY20E EBITDA.For all recommendations report, click here
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