Vedanta, an Indian mining and metals company, has announced that it will hold a board meeting on September 21 to discuss the issuance of non-convertible debentures (NCDs). The move comes as the company faces debt repayment of $2 billion, which is due soon. This proposal is part of Vedanta’s routine refinancing activities.
Shares of Vedanta initially rose by around 1% following the announcement. However, the stock has been struggling throughout the year and is down over 23% year-to-date. The company’s parent company, Vedanta Resources, is also facing the repayment of bonds worth nearly $2 billion in FY25, with a total debt repayment of $3.6 billion scheduled for the next financial year.
To raise funds for debt repayment, Vedanta plans to use the proceeds from the issuance of NCDs. The company’s high leverage and funding gap of $3 billion in FY25 are of concern, according to a report by Kotak Institutional Equities. This report suggests that Vedanta Resources may need to divest stake/assets in its subsidiary and that large dividends are no longer feasible. Additionally, the current commodity cycle presents a downside risk to earnings.
Analysts covering Vedanta are not very optimistic about its prospects, with the majority of brokerages maintaining a ‘hold’ or ‘sell’ rating on the stock. It is advised that investors consult certified experts before making any investment decisions.
Source: Moneycontrol.com (Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.)