Capitalcube gives Vedanta Resources Plc a score of 25.
Our analysis is based on comparing Vedanta Resources Plc with the following peers – Antofagasta plc, Rio Tinto plc, Anglo American plc, KAZ Minerals PLC and Glencore plc (ANTO-GB, RIO-GB, AAL-GB, KAZ-GB and GLEN-GB).
Vedanta Resources Plc has a fundamental score of 25 and has a relative valuation of UNDERVALUED.
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- From a peer analysis angle, relative underperformance over the last year has improved more recently.
- Vedanta Resources plc currently has a negative book value and its current Price/Assets ratio of 0.10 is lower than its peer median (0.67).
- VED-GB‘s book value of equity is not positive and suggests that that it is not meaningful to analyze its ROE versus P/E in order to determine whether the company has an operating or growth advantage.
- VED-GB has relatively low profit margins and median asset efficiency.
- Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
- Over the last five years, VED-GB‘s return on assets has declined from about median to less than the median among its peers suggesting that the company’s historical competitiveness in operations is slipping away.
- The company’s median gross margin and relatively low pre-tax margin suggest high operating costs versus peers.
- While VED-GB‘s revenue growth in recent years has been above the peer median, the stock’s Price/EBITDA ratio is less than the peer median suggesting that the company’s earnings may be peaking and the market expects a decline in its growth expectations.
- The company’s capital investment program and to-date returns suggest that the company is likely making big bets on the future.
- VED-GB seems too levered to raise additional debt.
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Leverage & Liquidity
VED-GB would seem to have a hard time raising additional debt.
- With debt at a relatively high 102.59% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 40.99%), and relatively tight interest coverage level of 1.80x, VED-GB would have a hard time raising much additional debt. The company has a Constrained profile in terms of its ability to take on further debt.
- All 5 peers for the company have an outstanding debt balance.
VED-GB has maintained its Limited Flexibility profile from the prior year-end.
- VED-GB‘s interest coverage is its highest over the last four years and compares to a low of 0.57x in 2016.
- The increase in its interest coverage to 1.80x from 0.57x (in 2016) was also accompanied by an increase in its peer median during this period to 5.02x from 1.79x.
- Interest coverage fell 2.00 points relative to peers. It is also below the 2.50x coverage benchmark unlike the peer median.
- VED-GB‘s debt-EV is its highest over the last four years and compares to a low of 63.32% in 2013.
- While its debt-EV increased to 102.59% from 100.16% (in 2016), its peer median decreased during this period to 40.99% from 82.01%.
- Relative to peers, debt-EV rose 43.45 percentage points.
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Key Liquidity Items
|Company||Debt/Enterprise Value (%)||Current Ratio||Interest Coverage (x)||Cash Flow To Total Debt (%)|
|Rio Tinto plc||17.58||1.58||8.65||76.27|
|Anglo American plc||42.97||1.98||7.01||45.74|
|KAZ Minerals PLC||81.36||2.09||1.84||8.5|
|Vedanta Resources plc||102.59||0.87||1.8||10.38|
|Best In Class||17.58||2.51||14.03||76.27|
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Vedanta Resources Plc is a diversified metals and mining company with interests in aluminum, copper, zinc, lead, silver, iron ore, oil, gas, and power. It operates through the following segments: Zinc-India, Zinc-International, Oil and Gas, Iron Ore, Copper-India or Australia, Copper-Zambia, Aluminum, and Power. The company was founded by Anil Kumar Agarwal in 1976 and is headquartered in London, the United Kingdom.
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