National Green Tribunal Orders Reopening Of Vedanta’s Sterlite Copper Plant In Tuticorin

Vedanta Ltd. can restart its copper smelter in Tuticorin, which accounts for nearly half of India’s output, the National Green Tribunal said.

Verdict Impact On Vedanta’s Financials

A favorable order from the NGT will be positive for Vedanta’s stock price, said JPMorgan, in a report released ahead of the tribunal’s verdict, but it’s likely to have limited impact on the company’s financials.

The copper division contributes only 5 percent to Vedanta’s operating income, according to BloombergQuint’s calculations based on the company’s financials. But the Anil Agarwal-led company has been one of the worst performers in the benchmark NSE Nifty 50 Index so far this year. The stock has declined nearly 39 percent, mainly due to the shutdown of the Tuticorin smelter and iron ore mining in Goa.

Also, analysts await more clarity on when the plant might be reopened.

“The timeline remains a question because final decision would end up with the Supreme Court as the losing party is likely to challenge it further,” Ritesh Shah, analyst at Investec Capital Services, said. “But it’s a step in the right direction for Vedanta.”

Agreed JPMorgan. A resolution could still be months away, it said, adding the smelter might not restart in financial years ending March 2019 and 2020 as well. “We expect the smelter to restart only from the second quarter of FY21.”