Hard on the heels of Tata’s purchase of Jaguar and Land Rover and this weekend’s takeover of Virgin Radio by The Times of India, another predator from the world’s most populous democracy is showing an appetite for Western assets.

Sterlite Industries, an Indian business that is part of the London-listed Vedanta Resources, is paying $2.6 billion (£1.3 billion) for the assets of Asarco, the bankrupt copper miner that is America’s third-biggest producer of the metal.

The deal is less notable for its strategic intent – having shipped 235,000 tonnes of refined copper last year, Asarco takes Vedanta comfortably two thirds of the way towards its long-term target of producing one million tonnes a year – than its geography. All of Asarco’s interests are in the United States, which is not somewhere that Vedanta has operated before.

That could be troubling, given the complexities of running a large natural resources business in America and the distance of Asarco’s assets from Vedanta’s home turf. But there are grounds for confidence. First, Vedanta has an enviable track record at wringing value from its acquisitions. Not only in India, where it has a history of turning round underinvested former state-run companies, with which a recently cash-starved Asarco should share several similarities.

Overseas, it has bought well in Australia, before its 2003 flotation, but most prominently in Zambia, where operating profits from the Konkola copper mine have more than doubled. The success to date of Vedanta’s other big purchase since the float, last year’s $1 billion acquisition of a controlling stake in Sesa Goa, the Indian iron ore producer, also reassures. Production and operating profits are both running at record levels.

Secondly, Vedanta is paying a multiple of only four times operating profits, which means that the deal will enhance earnings immediately and gives Vedanta scope to echo its previous form. Asarco’s strong cash-generation also means that the acquisition will be partly self-financing.

There are two cavils. That Asarco is being acquired through Sterlite rather than Vedanta suggests again that the founding Agarwal family is reluctant to see its majority stake diluted. Also, the deal is subject to approval of the US bankruptcy courts, which means that it will not close until next year and could attract the attentions of a counterbidder.

Vedanta’s ability to boost volumes and reduce costs should serve it well – irrespective of territory. That said, at £25.05, or 13 times current-year earnings, Vedanta’s shares are up with events for now.

Detica

Last autumn Detica gained the distinction of being the first London-listed IT company to feel the effects of the credit crunch when it said that falling spending by investment banks meant that profits would fall short of forecasts.

That was a blow, given that Detica – whose historic strength had been analysing large volumes of data for government agencies – had partly set out its stall on further transferring its skills to financial markets. Its shares promptly fell 25 per cent. So the reassurance from yesterday’s full-year figures was that financial services work, accounting for a quarter of sales, “appears to have stabilised”. Further, demand from retail banks, insurers and regulators for fraud-detection applications is holding up well. That did not stop the shares falling nearly 6 per cent, however. A fall in the proportion of profits converted into cash was a concern – although that was in part because of increased reliance on fixed-price contracts. Detica is also clearly keen to make further acquisitions in America, the source of only a tenth of its sales. However, given the problems associated with integrating DFI, its 2006 Washington-based acquisition, Detica may appear to have learnt its lesson this time round.

Detica’s strength in more turbulent times is that government work makes up nearly two thirds of its sales and, as shown by recent contract wins for the Metropolitan Police and the Home Office’s e-Borders programme, the company has lost none of its skills in securing big-ticket deals. On those grounds, 262¼p, or 15 times current-year earnings, is reasonable, given 20 per cent growth and negligible debt. Hold.

e2v

Marconi may have long since disappeared from the stock market, but vestiges of the late Lord Weinstock’s electronics empire remain: e2v Technologies, for example, a maker of sensors, semiconductors and electronic tubes, whose gadgetry helped to capture the first 3D images of Mercury, to operate gene-sequencing machines and to protect the Eurofighter Typhoon from air-to-air missiles.

However, the Chelmsford-based company, whose shares by last summer had more than trebled from their 2004 issue price (e2v had been bought out from Marconi in 2002 and refloated by 3i), has fallen from favour recently. The acquisition two years ago of a manufacturing plant in Grenoble left it with net debt of £93 million – more than half its stock market value – while a sharp fall in demand for dental imaging equipment (caused by Danaher consolidating that sector and curbing capital expenditure) raised concerns over its defensiveness.

Yesterday’s full-year figures show that e2v has regained some of its poise. Any weakness in sensors has been more than made up for by electronic tubes, where strong defence-related demand has helped divisional profits up 43 per cent. A recent maiden order from the US Department of Defence for a naval jet programme also suggests that further growth is not wholly reliant on short-term military budgets. At 291p, or nine times current-year earnings, e2v is too cheap. Buy.

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