Seeking Alpha: The Easy Part May Be Over For Vedanta Resources

India-focused Vedanta Resources Plc (OTCPK:VDNRF) (VED.L) has come along pretty nicely since I identified it as an undervalued resource company back in December of 2013. After a 20% run that has outpaced peers like Glencore Plc (OTCPK:GLNCY), Rio Tinto (NYSE:RIO), and BHP Billiton (NYSE:BHP), I'm not quite so bullish on the shares. Although Vedanta has much to gain from more efficient operations, a more pro-business government in India, and stronger base metal prices, ongoing operating challenges in copper, aluminum, and iron ore are not to be ignored. There's still a lot of self-improvement potential here, but it won't be light work and investors will have to have some patience.

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The Easy Part May Be Over For Vedanta Resources

Seeking Alpha: Vedanta Undervalued, But For Some Valid Reasons

Many investors spend a great deal of time and energy trying to figure out if a stock is cheap, but maybe not always enough time asking why that stock is cheap. Vedanta Resources (OTCPK:VDNRF) (VED.L) is a good case in point. This natural resources company is not only quite diversified, along the same lines as BHP Billiton (BHP) and Rio Tinto (RIO), but it is also focused on one of the major emerging market economies (India). Unfortunately, that focus and reliance upon India has not always been to the company's advantage, and investors have likewise been put off by the company's capital structure, group structure, and the general bearishness hitting the materials/resources sector.

I'm inclined to argue that the discount is a little too extreme. I don't believe India is as great of an opportunity as some, but I do believe common sense will dictate an improving operating environment for the company. Additionally, I believe that Vedanta has made good progress on simplifying its confusing group structure. With a fair value in the neighborhood of GBP 10.00 to 11.00 and a solid dividend, I think this is a name at least worthy of consideration for investors looking to gain exposure to a rebound in the resources sector.

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Vedanta Undervalued, But For Some Valid Reasons