Vedanta Resources Plc USD 0.10 (VED)

Company overview

Vedanta Resources is a major mining group whose principle operations are located in India.

 

HL Comment (10 April 2008)

Vedanta is a diversified metals and mining group which listed on the London Stock Exchange back in December 2003. The group’s core Indian commodities include copper, aluminium, zinc and lead. Although its major operations are based in India, where it has major market shares in each of its leading commodities, it also has substantial copper operations in both Zambia and Australia. Other operations include smelting and an aluminium conductor and foil business.

The group’s recent production report (10April08) saw management announcing output volumes which were significantly higher across the group, with iron ore production up 17pc to 12.44 million tonnes, aluminium output showing 12.8pc growth to 396,000 tonnes and refined zinc production jumping 22.4pc to 426,000 tonnes. On the downside, copper production in Zambia suffered, due to power supply problems in Southern Africa. In broad terms, the report appeared to meet analysts’ expectations.

Acting for negative investor considerations, productions costs across the entire mining industry have been rising of late, particularly energy costs, a significant slowdown in world economic growth could curtail demand for the group’s commodity portfolio and question marks have been raised over the current valuation (+68pc over the last 12 months as of 10April08). On the positive, commodity prices remain buoyant, management remain relatively upbeat and speculation still persists that the industry could undergo further consolidation. On balance, market consensus opinion is currently positive in tone.

All yield figures are variable and not guaranteed.

Fundamental Data

Year Ending	Revenue (m)	Profit Before Tax (m)	EPS ($)	P/E Ratio	PEG	EPS Growth (%)	Total Dividend	Dividend Yield
31-03-2008	8,203.70	2,763.20	3.05	12.60	n/a	(7.00)	0.42	1.10
31-03-2007	6,502.20	2,484.40	3.26	7.40	n/a	151.00	0.35	1.40
31-03-2006	3,701.80	934.70	1.30	19.70	0.10	166.00	0.20	0.80
31-03-2005	1,884.20	386.30	0.63	17.50	n/a	n/a	0.17	2.00
31-03-2004*	1,289.50	233.40	n/a	n/a	n/a	n/a	0.06	0.90

* Prior to 31st March 2005, figures were stated under UK Generally Accepted Accounting Principles (GAAP). Recent figures stated under International Financial Reporting Standards (IFRS).