Anil Agarwal-owned Vedanta group is making a fresh overture to acquire the government’s residual stakes in Hindustan Zinc Ltd (HZL) and Bharat Aluminium Company (Balco) for a combined sum of $3,482 million, valuing the deal at Rs 21,636.56 crore.
Vedanta Group currently holds 64.9 percent stake in HZL and 51 percent in Balco. It proposed the government on January 2012 to acquire the entire residual stake for Rs 17,200 crores valuing the combined stake at USD 3.2 billion at the then currency rate.
Anil Agarwal’s Vedanta Resources has sought shareholder nod to extend the offer to acquire residual government stakes in Hindustan Zinc Limited and Balco. Vedanta shareholders will meet on October 30 to renew an enabling resolution that will allow the group cos’ to buy the remaining stake in HZL and Balco from government of India
The entire stake will be bought using internal cash accruals of group company Sesa Goa. Vedanta had indicated during the group restructuring that residual stake acquisition will be led by SesaGoa. The question now is whether the government will take the bait. The offer is 26.8% higher that the Jan 2012 offer. But it does have a lot of ‘Ifs’ and ‘Buts’ attached. The government will have to seek amendment to Mines and Minerals (Development & Regulation) Act, 1957 as per the advice of the Law Ministry before it proceeds on this path of divestment. Both HZL & Balco were nationalised under the Act of the Parliament in 1960s and hence amendments have to be made under the Act before residual stake process is completed. On October 15, 2013, Hindustan Zinc closed at Rs 132.55, up Rs 3.00, or 2.32 percent. The 52-week high of the share was Rs 146.80 and the 52-week low was Rs 94.00. The company’s trailing 12-month (TTM) EPS was at Rs 16.52 per share as per the quarter ended June 2013. The stock’s price-to-earnings (P/E) ratio was 8.02. The latest book value of the company is Rs 76.39 per share. At current value, the price-to-book value of the company was 1.74.
TECHNICAL CHART READING FOR HINDZINC
IF we see the chart development of hindzinc we can see that stock has already reverse from bottom, from almost rs. 100 level, and given a up move, and at present we can see that it has done the consolidation in a range of rs. 125 to 138 range from past 2 months.
so technically this indicated that stock has already given a bottom reversal signal, which we assume to be a inform buying or insider buying in stock for up coming news, and recently before news came it has done the good consolidation, so now if it able to do breakout upper side then we can see more movements in the stock.
see the technical indication from stock.
as we can see that when stock bottom out in a range of 95-100 we can clearly see that it has given a ” POSITIVE CONVERGENCE” signal at bottom and same was confirm at rs. 105 level, so this was a reversal from stock.
with the current chart development we can see that, RSI still not moved into overbought zone, and stock has also done consolidation for 2 months, so this indicate that if price able to give close above 138 level then we can see up move in stock with the support level of 120-125 range. And this can possibly provide us targets till 150-155 range, and from there we can again see correction in stock price, but if price able to give close above 155 level for 1 week or more then this stock will go in long term buying which can provide us target till 235-270-350 also in coming years.
so ultimate conclusion is till the time stock is not breaking 120 level, one can stay invested in this stock, breakout to see above 138 level close only, till that time its good to buy near support and sell near resistance, and ultimately if close above 155 level for 1 week then we can see some long term investment coming in this stock.