Just Invest and Become Insanely Wealthy - Vedanta Ltd. a Visual Analysis

Like most investors, I used to pour over Profit & Loss Statements, Financial Ratios, Balance Sheet, Cashflow Statements etc. Being an investor for over 20 years now, and managing my business Bril , I have a reasonably good understanding of these financial numbers. However, I too have been pressed for time while analyzing these numbers and at times this has delayed my investment decisions. While I love investing, this number crunching can be awfully boring for a person like me who is not much of a math and numbers person. So, something kept telling me that there must be an easier more intuitive way to invest and analyze this data and take gut based decisions faster. This is when I realized that there were tools to make investment decisions using visual insights! That's when I began my journey of intuitive investing and it has changed the way I make investment decisions forever, for the better. I believe so strongly in this philosophy now that I have written a book 'Just Invest and Become Insanely Wealthy' (You can Buy the Book on Amazon) to help investors greatly improve their intuitive and common-sensical investing, for great returns across asset classes. During this process I came across a brilliant company called Simply Wall Street (www.simplywall.st ), and was blown away by its simplicity and the quality of visual insights it offered for equity investing. I was so impressed that I made a small angel investment in the company and also promote it as an affiliate.

Today let us look at a very interesting, diversified conglomerate operating in the mining to networking/optical fibres and soon in semiconductor chips manufacturing through a JV with Foxconn. The company is Vedanta Ltd. and we will be using the Simply Wall Street tool to analyze this company in a purely visual manner, after a brief about what the company does!

Vedanta Limited operates as a diversified natural resources company in India. It explores for, develops, extracts, produces, processes, and sells oil and gas, zinc, lead, silver, copper, aluminum, iron ore, steel, pig iron, and metallurgical coke. The company also operates a thermal coal-based commercial power facility of 600 megawatts (MW) at Jharsuguda in the State of Odisha in eastern India; 2 units of 300 MW thermal coal based power plants at Korba; 1,980 MW thermal coal- based commercial power facilities; 274MW of wind power plants; and a power plant situated at Mettur Dam in the state of Tamil Nadu in southern India.

In addition, it manufactures and supplies billets, TMT bars, wire rods, and ductile iron pipes; engages in the mechanization of coal handling facilities and upgradation of general cargo berth for handling coal at the outer harbor of Visakhapatnam Port on the east coast of India; and provides logistics and other allied services inter alia rendering stevedoring, and other allied services in ports and other allied sectors. Further, the company is involved in manufacturing glass substrates in South Korea and Taiwan. It also operates in South Africa, Namibia, Ireland, Australia, Liberia, and the United Arab Emirates. The company was formerly known as Sesa Sterlite Limited and changed its name to Vedanta Limited in March 2015.

The company was founded in 1954 and is based in Mumbai, India.

Vedanta has dropped from Rs. 400+ per share to just over Rs. 200 per share due to market volatility! This has nothing to do with the intrinsic value of the business and hence the green snowflake indicating great value with respect to its earnings, which we will see shortly.

The above screenshot shows a healthy revenue, earnings and profit margins.

If you see the screenshot above, Vedanta has a whopping 27% as dividend yield at the current market price. Whether this is sustainable or not is anyone's guess, but as of now the company has a very healthy balance sheet and pays out a major portion of its earnings to its shareholders. This bulk payout is primarily because Vedanta Resources Limited, London, UK being its parent company?receives the bulk of the dividend payments. So, for investors who want capital appreciation and great dividends this is a dream come true company at least for now. 27% yields don't come by everyday.

The super green snowflake above shows tremendous value for the company.

From the above three screenshots it is evident that Vedanta is fairly priced with respect to Price to Earnings, Price to Sales and Price to Book ratios.

If you see the screenshot above Vedanta has one of the lowest PEs when compared to its peers. Only 500470 which you will see is Tata Steel, when you roll over it on the Simply Wall Street website, has a lower price to earnings ratio.

Even if we do a PE Vs Industry, Vedanta comes out with flying colours with a PE of 4.2 vs a PE of 12.5 for the industry average.

The above screenshot shows that a discounted cash flow valuation done for Vedanta pegs the share price at a fair value of Rs. 530.78, while its current share price is just Rs. 214.45. There is clearly room for capital appreciation if one were to buy at the current levels.

While the above screenshot doesn't rate Vedanta's future growth prospects highly, this is where we have to use our intelligence and knowledge. Vedanta's mining businesses are cash cows and not high growth, but its newer businesses in the optical fibre space through its investment in Sterlite Technologies and its upcoming mega semiconductor chips project through a JV with Foxconn are very promising for future growth if executed well.

Vedanta has clearly not been a growth stock with earnings growing at just 7.8%. So if one were to invest in Vedanta, it should be based on a value bet, for its superb dividend yields and to some extent looking at its new businesses to contribute to better earnings growth in future. The new businesses could very well make Vedanta a growth stock in future, but there are never any guarantees to that.

Vedanta's key and very important ratios of Return of Equity and Return on Capital Employed are very healthy

So once again, the above screenshots show us that Vedanta is a true dividend aristocrat, though the dividend payout growth is not linear and is sometimes unpredictable.

So there you go.....that was the visual analysis of Vedanta Limited. Did you like this information? Will you buy Vedanta? Let me know in the comments. Follow me on LinkedIn (https://www.dhirubhai.net/in/rajaramjayaram/) for more such visual insights on companies.

If you are really serious about growing your wealth by learning to make investments across asset classes ranging from Equity to Debt to Gold to Agriculture to Real Estate to Revenue Based Financing to Angel Investing and more, buy my book Just Invest and Become Insanely Wealthy now and be amazed at how common-sensical, fun and easy investing can be.

If you liked the detailed visual insights in this post, do create your account on Simply Wall Street by Clicking Here!

You can analyze companies from around the world easily on your phone or desktop. Make your money work for you!

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DISCLAIMER:

Please note that this post is purely intended for educational purposes on intuitive investing only and not a stock recommendation. Please do your own research before making any investments in the stock market or other asset classes. Investing carries a risk of losing your capital. I am the author of a book 'Just Invest and Become Insanely Wealthy' , on this new way of investing that would help the beginner, intermediate and experienced investor become better investors across various asset classes.