It is reported that analysts at Credit Suisse are reacting to news reports that Indian authorities have raised the export tax on all grades of iron ore from 20% to 30% putting further pressure on exports. Coupled with project delays in Brazil they now believe that iron ore prices may stay higher for longer.

However whereas companies such as Rio Tinto or Ferrexpo may benefit the opposite is true of Vedanta as the company operating profits in terms of EBITDA may be reduced by close to USD 150 million as a result.

As well, the increased taxation comes just as the company has taken on new debt to finance its acquisition of Cairn India. More specifically, Credit Suisse believes that the margin of error for the company to be able to meet its debt covenants is thin when looking out to fiscal year 2013.

Credit Suisse rates shares of Vedanta at neutral.

(Sourced from www.sharecast.com)