VEDL: Need To Stay Above 94-96 For Further Rally

Sustaining over 94-96 zone, VEDL may further rally up to 111-120-130;

Otherwise, it will come down and below 84, may fall again towards 74-66-58

Hike of 2.5% of import/customs duty on Aluminum (safeguard measures in 2016 budget)

has been neutralized by imposition of EV cess by 50% on coal (Rs.400/- PT)

Despite recent Chinese demand recovery & more stimulus hopes,

there may be significant mismatch in demand-supply dynamics for metals in the near term 

Trading Idea:

CMP: 88

Either sell below 84 or on rise around 94-96;

TGT: 74-66*-58-48 (1-3M)

TSL>  102-104

Note: Consecutive closing (3 days) above 104 for any reason, VEDL may further rally up to 111-120-130-151 in the short to long term (alternative bullish case scenario).

Consolidated TTM EPS of VEDL is now at 8.71 (without exceptional Q4FY15 figure of -19955.67)

Standalone TTM EPS of VEDL is now at 7.30

Consolidated debt at FY-15: Rs.71965.91 cr*

Avg net P/L for the last five years: Rs.4396 cr* (Approx after discarding the FY-15 exceptional loss of Rs.22129 cr).

Consolidated FY-15 D/E : 1.34

As par BG metrics & current market scenario:

(based on standalone TTM & FWD EPS with avg PE of 10)

Current median valuation of VEDL may be around: 83 (FY:15/TTM)

Projected fair valuations might be around: 83-88-95 (FY:16-18/FWD)

SCRIP	EPS(TTM)	BV(Act)	P/E(AVG)	Low	High	Median	200-DEMA	10-DEMA
VEDL	7.3	114.88	10	89.91	76.71	83.31	110.74	80.6

VEDL

7.2

116.65

10

89.29

76.18

82.74

110.74

80.6

VEDL

8.15

118.75

10

95.00

81.05

88.03

110.74

80.6

VEDL

9.4

121.45

10

102.03

87.04

94.53

110.74

80.6

Analytical Charts: