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Vedanta opens strong on possibility of strategic sale, but goes flat

The stock was down over 20% in February while so far in March after huge volatility it is up just 2.6%.

March 24, 2023 / 10:55 AM IST
Anil Agarwal, Vedanta Resources Chairman

Anil Agarwal, Vedanta Resources Chairman

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Shares of Vedanta Ltd erased the 3% that it gained in the morning and were trading flat on 24 March. The stock was down over 20% in February while so far in March it is up just 2.6% after huge volatility.

The sharp swings were seen on the counter after many analysts cautioned Vedanta's ability to repay debt in the near term.  According to ET reports, Anil Agarwal-led Vedanta, whose debt repayments upto $2 billion are maturing by June, has reached out to investors for a strategic stake sale of upto 10 percent in India-listed Vedanta Ltd. It is also exploring the possibility of leveraging the cash flows of the domestic subsidiary and upstreaming the borrowed funds moving them to the parent via dividend payouts, the ET report said.

Recently S&P Global has said that Vedanta Resources, the London-based parent company of Indian mining major Vedanta, liquidity is dependent on its capacity to secure funding and the proposed sale of international zinc assets to Hindustan Zinc. The rating firm said that the upcoming weeks will be critical for the company's liquidity.

Hindustan Zinc has recently sanctioned a fourth interim dividend of Rs 26 per equity share for the ongoing fiscal year. This dividend, which applies to each share with a face value of Rs 2, will result in a payout of Rs 10,986 crore. The dividend will be paid on March 29, as per the record date.

Vedanta Ltd will be a significant beneficiary, holding approximately 65% of Hindustan Zinc. The Indian government, with around 30% ownership, will also benefit. Vedanta Resources Ltd, based in London, is the ultimate holding company. This additional amount will bring some relief to Agarwal, who has been relying on dividends to clear his debt obligations, particularly after the Indian government opposed the group's proposal to sell its international zinc operations to Hindustan Zinc for about $3 billion. Vedanta Resources currently has a net debt of $7.7 billion.

Recently Vedanta also announced that its board will meet on March 28 to consider and approve the fifth interim dividend on equity shares, if any, for the financial year 2022-23.

first published: Mar 24, 2023 10:55 am