Vedanta shares slide over 6% amid block deal; promoter entity likely seller

Shares of Vedanta tumbled over 6% in intraday trade on Wednesday, in an otherwise positive broader market, amid a surge in volume trade. The counter witnessed strong volume as 12.8 crore shares worth ₹5,509 crore changed hands over the counter on the BSE as compared to two-week average of 8.65 lakh stocks. The name of buyers and sellers were not known immediately but a report suggests that a promoter entity was looking to sell stake in the metal and mining company.

Early today, Vedanta shares opened sharply lower at ₹437.90, down 3.56% against the previous closing price of ₹454.10 on the BSE. During the sessions, the stock declined 6.5% to hit an intraday low of ₹424.50, while the market capitalisation dropped to ₹1.64 lakh crore.

Vedanta shares touched its 52-week high of ₹506.85 on May 22, 2024, while it slipped to its 52-week low of ₹207.85 on September 28, 2023. In the last one year, the mining heavyweight has risen nearly 59%, while it surged around 70% in six months. In the past one month, the counter lost 3.5%, while it shed nearly 2% in a week.

Finsider International Company Ltd., a subsidiary of Vedanta’s parent Vedanta Resources, has proposed to sell 2.6% stake in Vedanta Ltd., CNBC-TV18 reported, quoting a Vedanta Resources spokesperson. In February this year, Finsider offloaded 6.55 crore shares, or a 1.76% stake, in Vedanta at an average price of ₹265.14 per share, raising over ₹1,737 crore.

The stake sale in Vedanta comes days after its group Chairman Anil Agarwal reportedly said that the promoters wouldn't pare any more equity stake in the company. At the end of March quarter, Vedanta's promoters owned 61.95% equity stake in the company.

The London stock exchange-listed Vedanta Resources’ Limited (VRL) annual debt maturities and interest obligation remain substantial for fiscals 2025 and 2026, which will require refinancing. While VRL has refinanced most of its near-term debt maturities ($3.2 billion) through the liability management exercise, the company still has significant external debt maturities ($900 million per annum) over the next two fiscals, as per CRISIL report released in March this year. So, its dependence on refinancing or higher dividend payout through operating cash accrual and brand and management fees by Vedanta is likely to remain high.

Earlier this month, Vedanta received approval from one of its major lenders, State Bank of India (SBI), to go ahead with its demerger plans. In September last year, the mining major proposed to demerge its existing businesses into six independent entities, subject to requisite approval. The demerger is expected to be completed by the end of this year, as per the letter issued by its chairman Anil Aggarwal to stakeholders last month.

As per the proposed demerger, Vedanta will be split into Vedanta Aluminum, Vedanta Oil and Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and Vedanta Ltd, which will be listed as separate entities on domestic bourses. The demerger is planned to be a simple vertical split, for every 1 share of Vedanta Ltd, the shareholders will additionally receive 1 share of each of the 5 newly listed companies.

Vedanta's business portfolio spans assets in zinc, silver, lead, aluminum, chromium, copper, and nickel; oil and gas; a traditional ferrous vertical including iron ore and steel; and power, including coal and renewable energy; and semiconductors and display glass. 

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