Deutsche Bank ranks Vedanta as top mining pick, upgrades to 'buy'

3rd Sep 2014 10:28

After a review of UK-listed miners, Deutsche Bank has said that Vedanta Resources is its top-ranked producer and upgraded its rating for the shares from 'hold' to 'buy'.The bank ranked 18 stocks under its coverage across 19 metrics, including net present value trends, working capital management, commodity diversity, production growth, returns, payouts and valuation multiples.Vedanta came out on top of the rankings, with analysts hailing the company's recent group restructuring which completed last year with the court clearance of the merger of its copper and iron ore units. Deutsche said that this was an "important step" in simplifying the group's structure. What's more, the potential buyout of the Indian government's stakes in subsidiaries Hindustan Zinc and Bharat Aluminium Company is seen as "critical for maximising cash fungibility across all group entities".Following this, the bank expects Vedanta to improve on its near-term targets in 2015, comprising an iron ore mining re-start, bauxite sourcing in India and the development of copper operations in Zambia.As for the other miners under its coverage, Rio Tinto and BHP Billtion are second and third on the list respectively and are both ranked as 'buys'.In contrast, precious metal stocks dominate the bottom rankings due to declining commodity prices and high capital expenditure. As part of its review, the bank has downgraded its ratings for Randgold Resources and African Barrick Gold from 'buy' to 'hold'.Vedanta was trading 2.6% higher on Wednesday morning, while Randgold and African Barrick Gold were down 0.5% and 3.5%, respectively.BC