An influential Wall Street bank is banging the drum for India-focussed miner and oiler Vedanta Resources PLC (LON:VED).
A punchy valuation suggests there is plenty more forward momentum for a share price that is up almost 200% in the year to date.
Goldman Sachs likes group’s exposure to the zinc sector, and said balance sheet and corporate governance concerns have now been allayed.
It rates the stock a ‘buy’ up to 1,300p (current price 874p).
Of the six houses logged as following Vedanta, Goldman is the sole ‘buyer’. Three are ‘neutral’ on the stock, while one is a ‘sell’.
In the past six months the consensus price target has risen to 603p from 265p.
Looking more closely at the company and its investment credentials, Goldman says Vedanta has one of the best zinc assets in the world.
It is also heartened that financial worries are dissipating.
Vedanta is now able to restructure its debt, while the takeover of Cairn India has given it access to around US$3bn of cash.
The management and ownership structure was also cleaned up following that deal.
“We estimate Vedanta will generate an average 14% free cash flow over the next three years, which provides optionality around delevering and dividends,” said Goldman in a note to clients.