Explained: why are Vedanta investors disappointed at RS 17,000-crore Jaiprakash acquisition bid

Vedanta’s RS 17,000 crore -winning bid for the assets of Jaiprakash Associates under NCLT has drawn a lukewarm reaction of analysts. Brokers have weak synergies, debt risks and limited visibility marked with every turning point, which suggests that the deal could do more harm than good for the company led by Anil Agarwal.

Nuvama Institutional shares called the move ‘negative for minority shareholders’. According to the brokerage, Vedanta must give priority to debt reduction instead of vending to non-related and loss-making companies. Although the company could earn some of the acquired assets, Nuvama said that the deal will probably close any rating of the shares in the short term. Nuvama has a purchase call with a target price of RS 446.

Icici Securities was more critical, pointing out that the portfolio of Jaiprakash shows a “fundamental lack of synergy” with the core products of Vedanta.

The name of the deal ‘De Kar for the Horse’ argued that the constant Demerger of Vedanta, aimed at giving investors targeted exposure to raw materials, is uncomfortable with the addition of cement, real estate and fertilizer.

“In our opinion, it seems that the cart has been placed for the horse. At the moment it is our opinion that the company can look to keep the electricity, real estate, construction and fertilizers companies at its best and can separate with cement and other companies (because the factory seems to be far from existing steel/energy company, the use of snail and flying axis,” the Interior Breokerage of 8. “

Citi Research warned that uncertainty surrounding the acquisition could create an overhang in stock. The brokerage expects the net debt from Vedanta to Ebita, excluding Hindustan Zink, will reach 2 times in March 2026. Citi has maintained a ‘buy’ rating on Vedanta with a target price of RS 500. The acquisition gives Vedanta a mix of companies that cement, power, fertilizer, real estate, engineering, and engineering, and engineering, and engineering, and engineering, and engineering, and engineering, and engineering, and engineering, and engineering, and engineering, and engineering, and engineering, and engineering, and engineering, and engineering, and engineering, and engineering, and engineering, and engineering, and engineering, and engineering, Enginé and the Engineering, and the construction of the Engineering, and the Engineering, and the construction of the Engineer, and the Engineering, and the construction of the Engineer, and the Engineering, and the Engineering and Construction. The payment structure is spread for five years, with a first delivery of approximately RS 3,700 – 3,800 crore after approvals, followed by RS 2,700-3,300 crore per year. Although this reduces the immediate pressure on cash flows, the care is less about the timing of payments and more about what Vedanta buys.

Jaiprakash Associates, included in 1995 as the flagship of the JayPee Group, has long struggled with debts and delayed projects. The income in FY24 was dominated by fertilizer (45%) and the construction (35%), while real estate contributed only 15%, hindered by legal disputes.

The company also has a 24% interest in Jaiprakash Power Ventures, which operates 2,200 MW Hydro-Thermal capacity and has access to around 10 million tons of cement capacity, only partially operational. Many of these companies have been losses for years.

For Vedanta, which is aimed at zinc, aluminum, oil and gas and strength, the assets offer little synergy. Analysts believe that the company can ultimately sell non-core pieces such as cement and real estate, but the immediate addition of complex, suitable companies that ask more questions raises more questions than answers.

With volatile raw material markets and its own expansion projects that are still ongoing, the timing of Vedanta has added to the skepticism.

At about 2 p.m. shares of the company traded on RS 436.25, with 2.2% of the previous closure on the NSE. Vedanta shares have fallen by 2% years to date.

(Disclaimer: recommendations, suggestions, views and opinions of the experts are their own. These do not represent the views of economic times)