Last updated: March 10, 2023, 3:52 PM IST
Vedanta is a diversified natural resources company.
Shares of Vedanta Ltd plunged more than 4 percent after Moody’s Investors Service downgraded its holding company’s rating
Shares of Vedanta Ltd fell more than 4 percent after Moody’s Investors Service downgraded the corporate family rating (CFR) of its holding company Vedanta Resources Limited (VRL) from B3 to Caa1 due to rising debt maturity refinancing risks. The rating outlook remains negative.
Vedanta shares fell 4.54% to Rs 272.55 against the previous close of Rs 285.50 on BSE. The share of Vedanta lost 26.43 percent in a year and fell by 9.8 percent since the beginning of this year. A total of 5.19 lakh shares of the company changed hands, representing a turnover of Rs 14.48 crore on BSE. The market capitalization of the company fell to Rs 1.03 lakh crore.
“Continued delays in Vedanta Resources’ refinancing efforts and continued reliance on dividend receipts deplete liquidity at its operating subsidiaries,” Moody’s said.
Concerns over Vedanta’s debt service arose after the government opposed the proposed sale of the international zinc business to Hindustan Zinc.
“We previously expected Holdco VRL to find sufficient funds through loans and dividends to address the debt maturity through June 2023. However, VRL is experiencing continued delays in raising funds compared to our previous expectations amid a funding environment that remains challenging with high interest rates, scarce market liquidity and tight credit availability,” added Chaubal, who is also Moody’s Lead Analyst for VRL.
“These issues expose the company to material refinancing risks and increase the likelihood of default or a distressed stock market.”
Technically, Vedanta’s Relative Strength Index (RSI) is at 40, indicating that the stock is neither overbought nor oversold. The stock has a one-year beta of 1.4, indicating very high volatility over the period. Vedanta stock trades below 5-day, 20-day, 50-day, 100-day and 200-day moving averages.
Earlier, S&P Global Ratings said the company’s credit rating could “come under pressure” if it is unable to raise $2 billion or sell its international zinc assets.
In the rating action announced Friday, Moody’s also downgraded senior unsecured bonds issued by Vedanta Resources and its Vedanta Resources Finance II Plc arm from Caa1 to Caa2.
Read all the latest business news here