Intrinsic value of Vedanta ADR - VEDL

Previous Close

$11.22

  Intrinsic Value

$761.61

stock screener

  Rating & Target

str. buy

+999%

Previous close

$11.22

 
Intrinsic value

$761.61

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of VEDL stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  27.10
  24.89
  22.90
  21.11
  19.50
  18.05
  16.74
  15.57
  14.51
  13.56
  12.71
  11.94
  11.24
  10.62
  10.06
  9.55
  9.10
  8.69
  8.32
  7.99
  7.69
  7.42
  7.18
  6.96
  6.76
  6.59
  6.43
  6.29
  6.16
  6.04
Revenue, $m
  17,839
  22,279
  27,382
  33,162
  39,629
  46,782
  54,615
  63,119
  72,280
  82,082
  92,512
  103,553
  115,194
  127,425
  140,238
  153,632
  167,605
  182,162
  197,313
  213,069
  229,447
  246,468
  264,155
  282,537
  301,645
  321,513
  342,179
  363,685
  386,076
  409,399
Variable operating expenses, $m
  11,378
  14,207
  17,457
  21,140
  25,260
  29,817
  34,808
  40,225
  46,062
  52,307
  58,938
  65,973
  73,389
  81,181
  89,345
  97,877
  106,779
  116,054
  125,706
  135,744
  146,179
  157,023
  168,291
  180,002
  192,175
  204,833
  217,999
  231,701
  245,966
  260,824
Fixed operating expenses, $m
  1,716
  1,754
  1,792
  1,832
  1,872
  1,913
  1,955
  1,998
  2,042
  2,087
  2,133
  2,180
  2,228
  2,277
  2,327
  2,378
  2,431
  2,484
  2,539
  2,595
  2,652
  2,710
  2,770
  2,831
  2,893
  2,956
  3,022
  3,088
  3,156
  3,225
Total operating expenses, $m
  13,094
  15,961
  19,249
  22,972
  27,132
  31,730
  36,763
  42,223
  48,104
  54,394
  61,071
  68,153
  75,617
  83,458
  91,672
  100,255
  109,210
  118,538
  128,245
  138,339
  148,831
  159,733
  171,061
  182,833
  195,068
  207,789
  221,021
  234,789
  249,122
  264,049
Operating income, $m
  4,745
  6,319
  8,132
  10,190
  12,497
  15,052
  17,852
  20,895
  24,176
  27,688
  31,440
  35,400
  39,577
  43,967
  48,567
  53,376
  58,395
  63,624
  69,068
  74,730
  80,617
  86,735
  93,095
  99,705
  106,577
  113,723
  121,158
  128,897
  136,954
  145,349
EBITDA, $m
  6,213
  8,148
  10,377
  12,907
  15,741
  18,879
  22,318
  26,054
  30,082
  34,394
  38,983
  43,843
  48,969
  54,356
  60,001
  65,902
  72,060
  78,476
  85,155
  92,102
  99,324
  106,831
  114,632
  122,741
  131,171
  139,937
  149,057
  158,549
  168,432
  178,728
Interest expense (income), $m
  829
  1,910
  2,733
  3,692
  4,793
  6,041
  7,437
  8,982
  10,673
  12,509
  14,487
  16,603
  18,855
  21,239
  23,752
  26,392
  29,159
  32,050
  35,067
  38,210
  41,481
  44,883
  48,419
  52,094
  55,912
  59,881
  64,006
  68,296
  72,757
  77,401
  82,235
Earnings before tax, $m
  2,835
  3,586
  4,440
  5,397
  6,456
  7,614
  8,871
  10,222
  11,667
  13,202
  14,837
  16,546
  18,338
  20,215
  22,174
  24,217
  26,344
  28,557
  30,858
  33,249
  35,734
  38,317
  41,001
  43,792
  46,696
  49,717
  52,863
  56,139
  59,554
  63,114
Tax expense, $m
  766
  968
  1,199
  1,457
  1,743
  2,056
  2,395
  2,760
  3,150
  3,564
  4,006
  4,467
  4,951
  5,458
  5,987
  6,539
  7,113
  7,710
  8,332
  8,977
  9,648
  10,345
  11,070
  11,824
  12,608
  13,424
  14,273
  15,158
  16,080
  17,041
Net income, $m
  2,070
  2,618
  3,241
  3,940
  4,713
  5,558
  6,476
  7,462
  8,517
  9,637
  10,831
  12,078
  13,387
  14,757
  16,187
  17,678
  19,231
  20,847
  22,526
  24,272
  26,086
  27,971
  29,931
  31,968
  34,088
  36,294
  38,590
  40,982
  43,474
  46,073

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  32,553
  40,656
  49,967
  60,515
  72,315
  85,368
  99,663
  115,181
  131,897
  149,785
  168,817
  188,965
  210,208
  232,527
  255,910
  280,349
  305,848
  332,413
  360,060
  388,812
  418,699
  449,759
  482,035
  515,579
  550,446
  586,702
  624,414
  663,660
  704,518
  747,078
Adjusted assets (=assets-cash), $m
  32,553
  40,656
  49,967
  60,515
  72,315
  85,368
  99,663
  115,181
  131,897
  149,785
  168,817
  188,965
  210,208
  232,527
  255,910
  280,349
  305,848
  332,413
  360,060
  388,812
  418,699
  449,759
  482,035
  515,579
  550,446
  586,702
  624,414
  663,660
  704,518
  747,078
Revenue / Adjusted assets
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
Average production assets, $m
  19,926
  24,886
  30,585
  37,042
  44,265
  52,255
  61,005
  70,504
  80,737
  91,686
  103,335
  115,669
  128,672
  142,334
  156,646
  171,606
  187,214
  203,475
  220,398
  237,998
  256,292
  275,305
  295,061
  315,594
  336,937
  359,130
  382,214
  406,237
  431,247
  457,298
Working capital, $m
  -1,124
  -1,404
  -1,725
  -2,089
  -2,497
  -2,947
  -3,441
  -3,977
  -4,554
  -5,171
  -5,828
  -6,524
  -7,257
  -8,028
  -8,835
  -9,679
  -10,559
  -11,476
  -12,431
  -13,423
  -14,455
  -15,527
  -16,642
  -17,800
  -19,004
  -20,255
  -21,557
  -22,912
  -24,323
  -25,792
Total debt, $m
  14,854
  20,064
  26,051
  32,833
  40,421
  48,814
  58,005
  67,983
  78,732
  90,234
  102,471
  115,427
  129,086
  143,437
  158,472
  174,187
  190,582
  207,663
  225,440
  243,928
  263,146
  283,117
  303,871
  325,439
  347,859
  371,171
  395,420
  420,655
  446,927
  474,293
Total liabilities, $m
  20,932
  26,142
  32,129
  38,911
  46,499
  54,892
  64,083
  74,061
  84,810
  96,312
  108,549
  121,505
  135,164
  149,515
  164,550
  180,265
  196,660
  213,741
  231,518
  250,006
  269,224
  289,195
  309,949
  331,517
  353,937
  377,249
  401,498
  426,733
  453,005
  480,371
Total equity, $m
  11,622
  14,514
  17,838
  21,604
  25,817
  30,476
  35,580
  41,120
  47,087
  53,473
  60,268
  67,461
  75,044
  83,012
  91,360
  100,085
  109,188
  118,671
  128,541
  138,806
  149,476
  160,564
  172,087
  184,062
  196,509
  209,453
  222,916
  236,926
  251,513
  266,707
Total liabilities and equity, $m
  32,554
  40,656
  49,967
  60,515
  72,316
  85,368
  99,663
  115,181
  131,897
  149,785
  168,817
  188,966
  210,208
  232,527
  255,910
  280,350
  305,848
  332,412
  360,059
  388,812
  418,700
  449,759
  482,036
  515,579
  550,446
  586,702
  624,414
  663,659
  704,518
  747,078
Debt-to-equity ratio
  1.280
  1.380
  1.460
  1.520
  1.570
  1.600
  1.630
  1.650
  1.670
  1.690
  1.700
  1.710
  1.720
  1.730
  1.730
  1.740
  1.750
  1.750
  1.750
  1.760
  1.760
  1.760
  1.770
  1.770
  1.770
  1.770
  1.770
  1.780
  1.780
  1.780
Adjusted equity ratio
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,070
  2,618
  3,241
  3,940
  4,713
  5,558
  6,476
  7,462
  8,517
  9,637
  10,831
  12,078
  13,387
  14,757
  16,187
  17,678
  19,231
  20,847
  22,526
  24,272
  26,086
  27,971
  29,931
  31,968
  34,088
  36,294
  38,590
  40,982
  43,474
  46,073
Depreciation, amort., depletion, $m
  1,467
  1,829
  2,245
  2,717
  3,244
  3,827
  4,466
  5,159
  5,906
  6,705
  7,543
  8,443
  9,392
  10,389
  11,434
  12,526
  13,665
  14,852
  16,087
  17,372
  18,707
  20,095
  21,537
  23,036
  24,594
  26,214
  27,899
  29,652
  31,478
  33,379
Funds from operations, $m
  3,537
  4,447
  5,487
  6,656
  7,956
  9,385
  10,941
  12,621
  14,423
  16,342
  18,374
  20,521
  22,779
  25,146
  27,621
  30,204
  32,897
  35,699
  38,614
  41,644
  44,793
  48,066
  51,468
  55,005
  58,682
  62,507
  66,489
  70,634
  74,952
  79,453
Change in working capital, $m
  -240
  -280
  -321
  -364
  -407
  -451
  -494
  -536
  -577
  -618
  -657
  -696
  -733
  -771
  -807
  -844
  -880
  -917
  -954
  -993
  -1,032
  -1,072
  -1,114
  -1,158
  -1,204
  -1,252
  -1,302
  -1,355
  -1,411
  -1,469
Cash from operations, $m
  3,777
  4,727
  5,808
  7,021
  8,364
  9,836
  11,435
  13,157
  15,000
  16,960
  19,031
  21,217
  23,513
  25,917
  28,428
  31,048
  33,777
  36,616
  39,568
  42,636
  45,825
  49,139
  52,582
  56,163
  59,886
  63,759
  67,791
  71,989
  76,363
  80,922
Maintenance CAPEX, $m
  -1,144
  -1,454
  -1,817
  -2,233
  -2,704
  -3,231
  -3,814
  -4,453
  -5,146
  -5,893
  -6,692
  -7,543
  -8,443
  -9,392
  -10,389
  -11,434
  -12,526
  -13,665
  -14,852
  -16,087
  -17,372
  -18,707
  -20,095
  -21,537
  -23,036
  -24,594
  -26,214
  -27,899
  -29,652
  -31,478
New CAPEX, $m
  -4,250
  -4,960
  -5,699
  -6,457
  -7,223
  -7,990
  -8,750
  -9,499
  -10,232
  -10,949
  -11,649
  -12,333
  -13,003
  -13,662
  -14,313
  -14,960
  -15,608
  -16,261
  -16,923
  -17,600
  -18,295
  -19,012
  -19,757
  -20,532
  -21,343
  -22,193
  -23,084
  -24,023
  -25,010
  -26,051
Cash from investing activities, $m
  -5,394
  -6,414
  -7,516
  -8,690
  -9,927
  -11,221
  -12,564
  -13,952
  -15,378
  -16,842
  -18,341
  -19,876
  -21,446
  -23,054
  -24,702
  -26,394
  -28,134
  -29,926
  -31,775
  -33,687
  -35,667
  -37,719
  -39,852
  -42,069
  -44,379
  -46,787
  -49,298
  -51,922
  -54,662
  -57,529
Free cash flow, $m
  -1,618
  -1,688
  -1,708
  -1,669
  -1,563
  -1,385
  -1,130
  -795
  -379
  117
  689
  1,341
  2,066
  2,863
  3,726
  4,654
  5,643
  6,690
  7,793
  8,949
  10,158
  11,419
  12,730
  14,093
  15,507
  16,973
  18,492
  20,067
  21,700
  23,393
Issuance/(repayment) of debt, $m
  4,474
  5,210
  5,987
  6,783
  7,588
  8,393
  9,192
  9,978
  10,749
  11,502
  12,237
  12,956
  13,659
  14,351
  15,035
  15,715
  16,395
  17,081
  17,777
  18,488
  19,218
  19,971
  20,754
  21,568
  22,420
  23,312
  24,249
  25,235
  26,272
  27,366
Issuance/(repurchase) of shares, $m
  403
  275
  82
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  4,877
  5,485
  6,069
  6,783
  7,588
  8,393
  9,192
  9,978
  10,749
  11,502
  12,237
  12,956
  13,659
  14,351
  15,035
  15,715
  16,395
  17,081
  17,777
  18,488
  19,218
  19,971
  20,754
  21,568
  22,420
  23,312
  24,249
  25,235
  26,272
  27,366
Total cash flow (excl. dividends), $m
  3,259
  3,797
  4,362
  5,114
  6,024
  7,008
  8,062
  9,183
  10,370
  11,619
  12,926
  14,296
  15,726
  17,214
  18,761
  20,369
  22,038
  23,771
  25,570
  27,437
  29,376
  31,390
  33,484
  35,661
  37,926
  40,285
  42,742
  45,302
  47,972
  50,759
Retained Cash Flow (-), $m
  -2,473
  -2,893
  -3,324
  -3,766
  -4,213
  -4,660
  -5,103
  -5,540
  -5,968
  -6,386
  -6,794
  -7,193
  -7,584
  -7,968
  -8,348
  -8,725
  -9,103
  -9,484
  -9,870
  -10,265
  -10,670
  -11,088
  -11,523
  -11,975
  -12,448
  -12,943
  -13,463
  -14,011
  -14,587
  -15,194
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  786
  905
  1,038
  1,348
  1,812
  2,348
  2,959
  3,644
  4,402
  5,233
  6,132
  7,103
  8,142
  9,246
  10,414
  11,644
  12,935
  14,287
  15,700
  17,172
  18,706
  20,302
  21,961
  23,686
  25,479
  27,342
  29,278
  31,292
  33,386
  35,565
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  753
  828
  903
  1,110
  1,404
  1,704
  1,999
  2,277
  2,529
  2,744
  2,912
  3,031
  3,096
  3,104
  3,057
  2,959
  2,815
  2,631
  2,417
  2,182
  1,935
  1,685
  1,439
  1,206
  991
  798
  628
  484
  364
  268
Current shareholders' claim on cash, %
  94.1
  91.0
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3
  90.3

Vedanta Limited is a natural resource company engaged in the business of manufacturing copper and copper products, and aluminum and aluminum products. The Company's segments include Copper, which consists of manufacturing of copper cathode, continuous cast copper rod and anode slime, including from purchased concentrate and manufacturing of precious metal from anode slime, sulfuric acid, phosphoric acid; Iron ore; Aluminium, which consists of manufacturing of alumina and various aluminum products; Power, which consists of power, including power facilities engaged in generation and sale of commercial power, and Other, which consists pig iron and metallurgical coke. Its iron ore business consists of iron ore exploration, mining, beneficiation and exports. The Company has iron ore mining operations in the States of Goa and Karnataka. Its copper business consists of custom smelting. Its power business consists of 2,400 megawatt thermal coal based power facility in the State of Odisha.

FINANCIAL RATIOS  of  Vedanta ADR (VEDL)

Valuation Ratios
P/E Ratio -17.8
Price to Sales 3.5
Price to Book 5.4
Price to Tangible Book
Price to Cash Flow 20.7
Price to Free Cash Flow 47.4
Growth Rates
Sales Growth Rate -12.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -41.7%
Cap. Spend. - 3 Yr. Gr. Rate -6.7%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 120.1%
Total Debt to Equity 164.4%
Interest Coverage -4
Management Effectiveness
Return On Assets -4.5%
Ret/ On Assets - 3 Yr. Avg. -1.9%
Return On Total Capital -10.8%
Ret/ On T. Cap. - 3 Yr. Avg. -6.4%
Return On Equity -25.7%
Return On Equity - 3 Yr. Avg. -14.6%
Asset Turnover 0.3
Profitability Ratios
Gross Margin -36.9%
Gross Margin - 3 Yr. Avg. -16.5%
EBITDA Margin -22.8%
EBITDA Margin - 3 Yr. Avg. -0.5%
Operating Margin -42%
Oper. Margin - 3 Yr. Avg. -21.7%
Pre-Tax Margin -44.5%
Pre-Tax Margin - 3 Yr. Avg. -24.5%
Net Profit Margin -19.6%
Net Profit Margin - 3 Yr. Avg. -11.6%
Effective Tax Rate 36.2%
Eff/ Tax Rate - 3 Yr. Avg. 35.6%
Payout Ratio -13.9%

VEDL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VEDL stock intrinsic value calculation we used $14035.6374808 million for the last fiscal year's total revenue generated by Vedanta ADR. The default revenue input number comes from 0001 income statement of Vedanta ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our VEDL stock valuation model: a) initial revenue growth rate of 27.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for VEDL is calculated based on our internal credit rating of Vedanta ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Vedanta ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of VEDL stock the variable cost ratio is equal to 63.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1679 million in the base year in the intrinsic value calculation for VEDL stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 18.4% for Vedanta ADR.

Corporate tax rate of 27% is the nominal tax rate for Vedanta ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the VEDL stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for VEDL are equal to 111.7%.

Life of production assets of 13.7 years is the average useful life of capital assets used in Vedanta ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for VEDL is equal to -6.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $9148.47926267 million for Vedanta ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 65.027 million for Vedanta ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Vedanta ADR at the current share price and the inputted number of shares is $0.7 billion.

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COMPANY NEWS

▶ Vedanta Limited: Update on Electrosteel   [May-30-18 12:58PM  PR Newswire]
▶ Vedanta Limited: Update on Tuticorin Smelter   [May-29-18 05:55AM  PR Newswire]
▶ Vedanta Limited: Update on Tuticorin Smelter   [May-23-18 07:20AM  PR Newswire]
▶ Should You Buy Vedanta Limited (NSE:VEDL) Now?   [May-21-18 08:35AM  Simply Wall St.]
▶ Vedanta Limited: Copper India Update   [Apr-10-18 03:06AM  PR Newswire]
▶ Vedanta Limited: Copper India Announcement   [Mar-27-18 05:41AM  PR Newswire]
▶ Vedanta: More Upside as Commodities Remain Firm   [Jan-17-18 02:45PM  GuruFocus.com]
▶ ETFs with exposure to Vedanta Ltd. : November 3, 2017   [Nov-03-17 12:39PM  Capital Cube]
▶ Vedanta Sees Its Composite Rating Rise To 97   [Sep-06-17 03:00AM  Investor's Business Daily]
▶ Vedanta Will Continue to Trend Higher   [Aug-21-17 01:59PM  GuruFocus.com]
▶ ETFs with exposure to Vedanta Ltd. : July 10, 2017   [Jul-10-17 03:27PM  Capital Cube]
▶ ETFs with exposure to Vedanta Ltd. : June 27, 2017   [Jun-27-17 03:55PM  Capital Cube]
▶ Vedanta - Cairn Merger Effective   [Apr-11-17 10:39AM  PR Newswire]
▶ 10 Emerging Market Corporate Bond Picks: Embracing Risk   [Mar-07-17 11:45AM  Barrons.com]
▶ 14 Emerging Market Stocks You Should Have Owned in 2016   [Jan-03-17 12:03PM  at Barrons.com]
▶ Should You Buy Vedanta Ltd (ADR) (VEDL)?   [Dec-13-16 04:13PM  at Insider Monkey]

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