Vedanta rises 2% after parent receives royalty payment from Hindustan Zinc

As of 11.00 am, the stock traded up 1.64 percent at Rs 282.50 on BSE.

Shares of mining conglomerate Vedanta rose nearly 2 percent after the Anil Agarwal-owned company received a royalty payment from subsidiary Hindustan Zinc Limited, which helped its parent shave off some of its debt.

Hindustan Zinc paid a royalty of 1.7 percent of the annual revenue to Vedanta, which was passed on to the UK-based holding company Vedanta Resources Limited, reports cited Vedanta Resources' management as telling bondholders at the annual investor call earlier this week.

As of 11 am, the stock was trading 1.64 percent up at Rs 282.50 on BSE.

In the first quarter, locally listed Vedanta paid a higher royalty fee of 3 percent against last year's 2 percent, Vedanta Resources' management told bondholders. Vedanta Resources used the royalty fee helped redeem $500 million, 7.125 percent bonds due on May 31.

A royalty payment is made by a third party to the owner of patent or a brand for using that product or the brand. This is the first time Hindustan Zinc has paid a royalty.

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CreditSights said Vedanta Resources is expected to “successfully” service its debt maturities in the next 12 months. However, it is watchful of the refinancing risk for $4.2 billion term debt due in FY24 and has cautioned of execution risks, while the inability to tie up funds for late FY24 would pose downside risks.

As of April 2023, Vedanta Resources' gross debt stood at $6.8 billion, down from $7.8 billion at the end of March 2023 and $9.7 billion in March 2022.

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