Vedanta to raise up to ₹2,500 cr via NCDs; stock hits fresh 52-week low

Shares of Vedanta fell nearly 2% to hit a fresh 52-week low in intraday trade on Friday, despite the billionaire Anil Agarwal-led firm announcing a fundraising plan. The mining heavyweight has been under selling pressure for the last three sessions and fell nearly 6% during the same period.

The committee of directors of Vedanta on Thursday approved raising up to ₹2,500 crore through the issuance of non-convertible debentures (NCDs) in one or more tranches. The NCDs, having a face value of ₹1,00,000 each, will be raised through private placement of the debentures.

“The committee of directors at its meeting on September 21, 2023, considered and approved for raising, on a private placement basis, up to 2,50,000 numbers Secured, Unrated, Unlisted, Redeemable, Non-Convertible Debentures(NCDs) of face value ₹1,00,000 each aggregating up to ₹2,500 crores in one or more tranche(s),” Vedanta says in a BSE filing.

Reacting to the news, Vedanta shares opened 0.7% higher at ₹228.05 against the previous closing price of ₹226.55 on the BSE. However, the largecap stock soon lost momentum and declined 1.7% to touch a new 52-week low of ₹222.65, while the market capitalisation dropped to ₹83,914 crore. During the session so far, the stock has fallen as much as 2.6% from day’s high of ₹228.65.

At the current price level, Vedanta shares trade 53% from its 52-week high of ₹340.75 touched on January 20, 2023. The stock has fallen nearly 29% in the calendar year 2023, while it lost 21% in the past six months.

Last week, Vedanta shares gained for the four straight sessions amid a report that Anil Agarwal mulls transferring Zambia’s Konkola Copper Mines (KCM) — the country’s largest integrated copper producer — from his group’s holding company Vedanta Resources to Vedanta. In a post on X, formerly known as Twitter, Agarwal said that “KCM can be moved from Vedanta Resources to Vedanta Ltd at the right valuation”.

In his post, Agarwal said that the return of KCM to Vedanta Resources comes at a perfect time. Last week, the Government of the Republic of Zambia, which owns a 20% stake in KCM, allowed Vedanta Resources to take control and operate the copper mines and smelter plant.

"Copper is a key metal for world's decarbonisation. Demand is growing rapidly. In India, growth is over 20% annually. Vedanta acquired KCM in 2004 and made good profits when global copper prices were only $4,000. Now, global copper prices are around $8,500 and technologies are much superior so profitability will be much higher," he tweeted.

Vedanta shares started the year on a positive note but lost momentum in the last two months amid a slew of negative developments such as the withdrawal of Taiwan's Foxconn from a $19.5 billion semiconductor joint venture. The renewed concerns about piling debt of its London-based parent, Vedanta Resources, which has to repay term debt worth $4.2 billion in the FY24, also dented sentiments. 

Last week, S&P Global Ratings warned of possible downgrade of London-based Vedanta Resources amid changes in its financial policy regarding debt transactions. The global rating agency may downgrade Vedanta Resources’ current ‘B-’ rating to ‘CCC’ or ‘CC’ if the metals and mining firm tries a debt deal without enough compensation or buys back debt at a lower price than its face value in secondary markets, as per report.

According to a report, Vedanta Resources is exploring ways to meet its debt obligations and its management recently met investors in Singapore and Hong Kong to syndicate a $1 billion short-term loan. 

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