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HomeMarket NewsVedanta’s debt drags valuations, Jindal Steel’s Thyssenkrupp bid a short-term play: Axis Securities
Aditya Welekar, Senior Research Analyst at Axis Securities, believes the bid for Thyssenkrupp's European steel business by Naveen Jindal's private firm will have a limited, short-term sentimental impact on the listed Jindal Steel. He acknowledged the acquisition's complexity and high cost, particularly the transition to green steel. However, Welekar remains confident in the listed entity's strong fundamentals and growth trajectory, suggesting long-term investors need not be concerned about the promoter's ambitious move.
Aditya Welekar, Senior Research Analyst at Axis Securities, said the key to unlocking shareholder value for Vedanta lies in “the company’s progress on deleveraging.” He noted that while the stock’s dividend yield is significant, “the market’s focus remains on the reduction of debt.”
Also Read | High dividends mask Vedanta’s weak stock performance
Vedanta Resources carries $4.7 billion in holding company debt, while the standalone entity holds ₹58,000 crore. He said this high debt level is the main reason for Vedanta’s lower valuation compared to peers.
Welekar said a non-binding bid by Naveen Jindal’s Jindal Steel to acquire Thyssenkrupp’s European steel business is expected to have only a short-term impact. While the deal could provide access to the European automotive market, it involves high costs and complex restructuring.
Also Read | Jindal Steel bid lifts Thyssenkrupp shares to highest level in over four years
He added that the listed company’s “strong fundamentals and ongoing capacity expansion at Angul should shield it from long-term negative effects,” though the stock may see a sentimental dip initially.
For the full interview, watch the accompanying video
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