* India oil and gas production rises 3 pct
* Zinc India production jumps 16 pct
* Copper production in Zambia falls 26 pct
* Cuts full-year Zambia copper output forecast to 140,000
* Morgan Stanley cuts stock to 'underweight'; cites
valuation of Zambia assets
* Shares fall as much as 5 pct
Oct 9 Vedanta Resources Plc reported a
rise production at its Indian oil, gas and zinc units in the
second quarter and said it expected to resume mining iron ore in
the southern state of Karnataka in a few weeks.
However, shares in the company fell as much as 5 percent
after Morgan Stanley cut its rating on the stock to
"underweight" from "equal weight" citing a stretched valuation
for its Konkola Copper Mines (KCM) assets in Zambia.
"Vedanta has re-rated strongly versus peers since January
2012...As a result the implied valuation of its KCM copper asset
is now at a premium to the global copper peer group," Morgan
Stanley analysts said in a note to clients.
Copper cathode production at its India unit fell about 6
percent to 82,000 tonnes in the second quarter. Mined metal
production at its Zambia unit fell 26 percent to 34,000 tonnes.
The company also cut its full-year copper production outlook
from Zambia to 140,000 tonnes from 160,000 due to the ongoing
suspension of its Chingola F&D pits and slow ramp-up at the
The stock was down 4 percent at 1027 pence at 0855 GMT on
the London Stock Exchange.
Vedanta has been hurt by the ban on iron ore mining in
Karnataka and the western Indian state of Goa over the last few
quarters. The company received clearance from India's top court
in September to resume mining in Karnataka, but is still
awaiting a decision to permit mining in Goa.
The company said average daily gross operated production of
oil and gas at Cairn India, in which Vedanta acquired
a majority stake for almost $9 billion in 2011, rose to 213.3
million barrels of oil equivalent in the quarter ended Sept. 30.
Gross production at the Rajasthan block rose 2 percent to
175,478 barrels of oil equivalent per day.
Mined metal production at Zinc India increased 16 percent to
222,000 tonnes in the quarter. The company said its Kayad and
Rampura Agucha underground mine projects in Rajasthan were
progressing well and would start commercial production this
The conglomerate, controlled by Indian scrap
dealer-turned-billionaire Anil Agarwal, recently got legal and
regulatory approval to consolidate its web of subsidiaries and
simplify its structure.
However, Vedanta said its smelter in southern India had
restarted in end June and was operating at full capacity.
The smelter, operated by Vedanta's unit Sterlite Industries
, has long been the target of protesters and
politicians who call it a risk to fisheries in the coastal town
of Tuticorin, near the southern tip of India.
Under the consolidation plan, Sterlite Industries was merged
into its iron ore unit Sesa Goa to create a new entity Sesa
Vedanta produces copper, zinc, silver, aluminium, iron ore
and power through its operations in India, Zambia, Namibia,
South Africa, Liberia, Ireland and Australia.