Vedanta halts 6 sessions rally on clarification on semiconductor mfg; falls 9%

Shares of Vedanta tumbled nearly 9% in early trade on the BSE on Friday, snapping six sessions gaining streak, after billionaire Anil Agarwal-led mining company clarified that the proposed business of manufacturing semiconductors will be undertaken by its holding company, Volcan Investments. Volcan Investments is the family trust of London-based Vedanta Resources Plc.

“The proposed business of manufacturing semiconductors is not under Vedanta Limited and we understand that it will be undertaken by the ultimate holding company of Vedanta Limited, Volcan Investments Limited,” the mining company said in a clarification to exchange post market hours on Thursday.

In a separate filing, the Mumbai-headquartered company also clarified about the investment of $19.5 billion in Gujarat for chip and display projects in partnership with Foxconn. “The proposed business of manufacturing semiconductors is not under Vedanta Limited and we understand that it will be undertaken by the ultimate holding company of Vedanta Limited, Volcan Investments Limited,” it said.

Reacting to the news, Vedanta share price opened 4.8% lower at ₹299, against the previous closing price of ₹314.1 on the BSE. In the first hour of trade so far, the stock declined as much as 8.6% to hit a low of ₹287. The stock had rallied 20% in the past six sessions amid buzz about setting up a semiconductor plant in India. In comparison, the BSE Sensex was trading 660 points lower at 59,273 levels, in line with global equities after the World Bank warned of a global recession as central banks globally are hiking rates to combat rising inflation.

With a market capitalisation of ₹1.09 lakh crore, the largecap stock trades higher than 5-day, 20-day, 50-day and 100-day moving averages, but lower than 200-day moving averages. Vedanta shares have delivered a negative return of 5% in the last one year, while it has dropped nearly 14% in the calendar year 2022. The stock gained some momentum in the last three months, with shares rebounding 45% from its 52-week low of ₹206.1 on July 1, 2022, to ₹299 in intraday today. It touched a 52-week high of ₹440.75 on April 11, 2022.

Earlier this week, Vedanta announced a partnership with Taiwan-based chip maker Hon Hai Technology Group, also known as Foxconn, to make semiconductors in India as the country plans to cut its reliance on imported chips. Vedanta signed a joint venture agreement with Hon Hai Technology Group, the world's largest contract electronics manufacturer and supplier of Apple iPhone, to set up a semiconductor plant in Gujarat with investment of ₹1.54 lakh crore.

After announcing its first mega semiconductor plant in Gujarat, Vedanta also proposed to create an Apple iPhone and TV equipment manufacturing hub in Maharashtra. Mining magnate and Vedanta chairman Anil Agarwal revealed this during a TV interview on Wednesday while saying that his company plans to enter the electric vehicle space too.

However, the company has now clarified that proposed business will not be undertaken by Vedanta (listed entity) but by its holding company, Volcan Investments.