Vedanta Resources Ltd. offloaded stake in its India-listed subsidiary, Vedanta Ltd., to raise as much as Rs 6,000 crore on Wednesday. Finsider International Co., another subsidiary of Vedanta Resources, accepted a proposal from one of its banks to sell 2.6% shareholding in Vedanta, to a cohort of institutional investors, a company spokesperson said.
This is in line with the Group’s commitment to significantly deleverage its balance sheet at both the India and the Vedanta Resources level and with the broader initiative to support its strategic growth plans.
Using proceeds for repayments could help reduce Vedanta Resource's debt by over $650 million since the beginning of this fiscal, the Anil Agarwal-led company said.
Shares of Vedanta Ltd. fell over 6% after the large deal on Wednesday. About 4% shares changed hands, with promoter sales raising roughly Rs 6,000 crore.
Debt Restructuring
With $6 billion in debt as of March 2024, Vedanta Resources has been dealing with a number of rating downgrades since last year, due to concerns raised by analysts about liquidity and default risk.
Over the past two years, the company has deleveraged its balance sheet by $3.5 billion, with expectations to reach around $6.2 billion by the end of fiscal 2024. The company aims to further reduce debt by $3 billion over the next three years through brand fees, dividends, and internal accruals, without increasing Vedanta's debt.
Impact Of Large Trade
Promoters of Vedanta have sold 7.8% stake and garnered around Rs 7,400 crore between March 2023 and February 2024.
Proceeds from the latest block deal will be instrumental in addressing immediate debt obligations.
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Shares of the company fell as much as 6.17%, before paring loss to trade 2.72% lower at Rs 441.70 per share at 10:26 a.m. This compares to a 0.02% decline in the NSE Nifty 50.
The stock has risen 71.88% year-to-date. Total traded volume so far in the day stood at 45 times its 30-day average.
Out of 13 analysts tracking Vedanta, eight maintain a 'buy' rating, four recommend 'hold' and one suggests a 'sell', according to Bloomberg data. The average of 12-month analysts' price targets implies a potential upside of 7.7%.
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