Emkay Global Financial Services has upgraded Vedanta to 'Buy' with target price of Rs 235  in its report.

Vedanta announced merger of Cairn India subject to approvals from shareholders, regulators and other concerned authorities. Cairn India shareholders to get 1 share of Vedanta Ltd for each share held along with 1 redeemable preference share (face value Rs 10) for a tenure of 18 months.

Post this merger, the promoter stake in Vedanta Ltd wil come down from 62.9% to 50.1%, while, Cairn India minority shareholders will hold 20.2% and Vedanta Ltd minority shareholders will hold 29.7% in the merged entity

Commenting on the investment rationale, the stock broker said, ''We view this development as positive for Vedanta Ltd, as this will help strengthening the balance sheet and remove the holdco discount from the SOTP valuation. Weak commodity prices will continue to be an overhang, however, development on HZL is likely to be positive. Keeping our estimates unchanged, revise TP to Rs 235; Upgrade to Buy.''

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