Vedanta shares look too cheap
Questor share tip: Vedanta shares look too cheap
Last year was particularly torrid for shareholders in Vedanta Resources, the Indian mining giant controlled by billionaire Anil Agarwal. Questor says buy.
By Garry White 7:00AM GMT 12 Jan 2011
Negative headlines were generated over a proposed bauxite mine on holy lands in the Indian state of Orissa and the Indian government rejected the company's proposal.
Then, in August, the group said it planned to buy a controlling stake in Cairn India, majority owned by Cairn Energy, prompting Vedanta's shares to plunge about 20pc. Analysts were concerned abut the amount of debt the group would need to fund the deal and also about the move into oil, a very different business from mining. However, Questor said at the time it looked like a good strategic move.
Reports from India have suggested that the country's oil ministry will decide by early February on whether to allow the deal to progress. It has been reported that Mr Agarwal has written to the Indian prime minister to seek his help in speeding up approval of the deal. However, there has also been speculation that Essar Energy may be interested in the assets as well, although it has made no comment on the issue yet.
Vedanta has also delayed the flotation of its Konkola unit, which is a Zambian-based copper miner, because of market volatility, but an IPO is still in prospect. Vedanta owns almost 80pc of the group.
http://www.telegraph.co.uk/finance/mark ... cheap.html
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