Vedanta Shares Dip After Foxconn Exits $19.5 Billion JV: Buy, Sell Or Hold?

On Thueday, the shares of Vedanta dropped by 2% to an intraday low of Rs 274.90 during the early morning deals after Foxconn exits a $19.5 billion semiconductor joint venture with Vedanta Ltd.

"Foxconn is working to remove the Foxconn name from what now is a fully-owned entity of Vedanta. Foxconn has no connection to the entity and efforts to keep its original name will cause confusion for future stakeholders," the company said in a statement Monday.
Vedanta stated that it is completely engaged in its semiconductor project and started lining up more collaborators after Foxconn withdrew.

"Vedanta reiterates that it is fully committed to its semiconductor fab project and we have lined up other partners to set up India's first foundry. We will continue to grow our Semiconductor team, and we have the license for production-grade technology for 40 nm from a prominent Integrated Device Manufacturer (IDM)," the company said in the statement.

"We will shortly acquire a license for production-grade 28 nm as well. Vedanta has redoubled its efforts to fulfill the Prime Minister's vision for semiconductors and India remains pivotal in repositioning global semiconductor supply chains," Vedanta further added in a statement.

Comparatively to the BSE Metal index, which has dropped 1.45 percent on a YTD basis, Vedanta shares are down 11.78% year to date. However, Vedanta shares are in focus since Friday after the company added Semiconductors and Display Glass ventures to its portfolio. For India, where the market for semiconductors was valued at $ 24 billion in 2022 and is expected to rise to $ 80 billion by 2026, this provides a significant potential opportunity. By 2025, the display panel market, currently valued at $7 billion, is projected to reach $ 15 billion. Vedanta said its twin ventures will provide added momentum to the Government's goal of Atmanirbharta in electronics.

"The acquisition will be effected by way of a share transfer at face value of Twin Star Technologies Limited's ("TSTL") Semiconductor and Display SPVs. TSTL is a wholly owned subsidiary of Volcan Investments Limited, the ultimate holding company of Vedanta Limited," said Anil Agarwal-led company in a statement.

Vedanta Chairman, Anil Agarwal said, "Vedanta is committed to making India self-reliant in electronics. This is the beginning of the creation of a Silicon Valley in India, a cutting edge and world class electronics ecosystem. My dream is for every Indian youth to have an affordable smartphone, laptop and an electric vehicle."

David Reed, CEO of Vedanta's Semiconductor Business, said, "I believe that India can become the next semiconductor hub for the world. It has all the ingredients for success."

Akarsh Hebbar, Global MD, Vedanta's Semiconductor and Display Business, said, "We believe that semiconductors and display fab are at the core of any electronics ecosystem. This will also spawn the creation of multiple ancillary industries and opportunities in both downstream and upstream, creating jobs and will be a GDP multiplier."

Y.J. Chen, CEO of Display Business, said, "This is India's time to become only the 5th country in the world to manufacture display glass. The impact on consumers in terms of affordability of devices will be huge."

Vedanta Share Price Target

A R Ramachandran, Co-founder & Trainer - Tips2trades said "Foxconn pulling out of the JV with Vedanta is a massive blow for India to emerge as a strong contender in the semi conductor sector. Technically, Vedanta has strong support at 274 on the Daily charts. Only a Daily close above resistance of 285 could trigger a further uptrend till 295 in the near term."

Foxconn (Taiwan's) has overruled Semiconductor's deal with Vedanta. Semiconductor shortage is a major concern now in the Indian Automotive industry. However, we have micron in the pipeline but the Foxconn- Vedanta project was a "Ray of Hope" in the auto industry. Rescind of the deal agreement was a setback for Vedanta Group and its impact was seen in its stock price too. Today Vedanta Fell by 1.40% (as of now) but it has immediate support at 270.

Those holding this stock positional can consider a given level as a stop-loss point. Fresh Long could be initiated after 284 as it's a major short-term resistance for price now. 290/295/300/315/22/340/350.The current RSI (14 Days) is 46 and it's giving a bullish cross-over in MACD. So, those who are willing to take advantage to "Buy on Dip" and undervalued PE Ratio (Its PE is 9.91 v/s its sectors PE at 20.42), can opt for it now. Target and stop loss levels will remain the same says V.L.A. Ambala (SEBI Registered Research Analyst), Stock Market Today (SMT https://smtsebiregistered.com/ ).

Nirav Karkera, Head of Research, Fisdom said "Foxconn's exit has clearly dented investor sentiments, however only to an extent. While the JV was viewed positively and priced in accordingly, the latest development seems to have deferred, and not quite derailed, Vedanta's plans around its semiconductor fabrication plant aspirations. The reaction witnessed in the stock price can be viewed as intermittent and sensitive to developments on the plant agenda."

Disclaimer

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