Vedanta shares hit 52-week low after Moody’s downgrades ratings

Shares of Vedanta were in focus on Wednesday, a day after Moody's Investor Services downgraded Vedanta Resources Ltd's corporate family rating from 'Caa1' to 'Caa2'.

On Wednesday, the share price of the metals-to-oil major plunged as much as 6.2% to hit a 52-week low of ₹210. During the session on Wednesday, the share price of Vedanta Ltd opened lower at ₹217.75, down by 2.7%, against the closing price of the previous session. At 12:52 pm, the share of the company was trading 5.31% lower at ₹212.15. At present, the company's share price is trading 37.7% lower than the 52-week high, which the company touched on January 20 this year. In the past one month, three months and one year, the company has given 9.19%, 24.22% and 19.2%, respectively, in negative returns.

According to the global ratings agency, the outlook of Vedanta Ltd remains negative. The global rating agency says the company continues to face challenges in "refinancing its debt, a reflection of reduced appetite from the lending community, and a key credit concern."

According to Moody's, the negative outlook reflects Vedanta Resources Limited’s "persistently weak liquidity" profile and "its ability to address the imminent cash needs."

This is the second time this year that Moody's has downgraded Vedanta. Earlier this year, the global rating agency downgraded Vedanta Resources' CFR to Caa1 from B3.

In the April to June quarter this year, the company’s consolidated profit stood at ₹3,308 crore, declining by 40% year-on-year (YoY), as against ₹5,592 crore in the same period last year. The company's revenue from operations declined by 13% from ₹38,351 crore in the June quarter, as against ₹33,242 crore in the same period last year.

In July this year, Taiwan’s electronic major Foxconn pulled out of a joint venture with metals-to-oil major Vedanta Ltd, which was set up to make chips in the country. Vedanta in February this year partnered with chip electronics major Hon Hai Technology Group, which is the world's largest contract electronics manufacturer and the supplier of Apple iPhone, to produce semiconductors in India as the country eyes to reduce dependence on the imports of key electronics components.

Vedanta was supposed to hold a majority of equity in the JV, while Foxconn was the minority shareholder. The JV was expected to boost Prime Minister Narendra Modi’s vision to create an ecosystem for semiconductor manufacturing in India. Vedanta, however, said it is "fully committed" to its semiconductor fab project and has lined up other partners to set up India’s first foundry.