On Wednesday’s early trade, the largest mining ore company’s shares fell by 3.3 percent to Rs 251.90 per share after Moody’s Investor Service downgraded the company’s rating to Caa3 from Caa2.
At 1:06 p.m, Vedanta Ltd shares were trading at Rs 259.90 per share, down 0.21 percent on the National Stock Exchange. The company belongs to the large-cap category of stocks with a market capitalization of Rs 96,535 crore.
As per reports, Moody’s downgraded Vedanta Resources’ corporate family rating (CFR) to Caa3 from Caa2 and also downgraded the company’s senior unsecured bonds to Ca from Caa3. It maintained its negative rating outlook.
Moody’s reported that Vedanta Resources may face material liquidity issues over the upcoming 24 months and warned that the “default risk” remains high, noting that the group has an outstanding debt of $6.4 billion, which includes a $4.5 billion payment due by FY25.
As well in September 2023, Moody downgraded the company’s corporate family rating (CFR) from Caa1 to Caa2 based on elevated risks of debt restructuring.
The company’s revenue has increased by 6.2 percent yearly, from Rs 36,654 crore in Q2FY23 to Rs 38,945 crore in Q2FY24. In the same time frame, the company’s net profit has significantly declined from Rs 2,687 crore to a loss of Rs 915 crore.
Vedanta Ltd is a diversified natural resource company that explores, extracts and processes minerals as well as oil and gas. The company explores, produces, and sells zinc, silver, copper, aluminum, iron ore, and oil and gas.
As of the recent shareholding pattern, the company promoter holds a 63.71 percent stake in the company, While Foreign Institutional Investors hold a 7.82 percent stake and Domestic Institutional Investors hold a 10.59 percent stake in the company.
The company promoter held a pledge of 99.99 percent out of 63.71 percent stake in the recent quarter.
The company is diversified in the commodity segment of Refined Zinc, Refined lead, Alumina, Steel Production, Copper, Oil and gas, Zinc, and many other segments.
The company has a Market Presence and operations in India, Namibia, South Africa, UAE, Australia, and Ireland.
Moody’s credit ratings represent a rank-ordering of creditworthiness or expected loss. Moody’s rates any type of debt or related obligation of interest to institutional investors, e.g., bonds, debentures, asset-backed and mortgage-backed securities, convertible bonds, medium-term notes, derivative securities, etc.
The rating scale of Moody’s, running from a high of Aaa to a low of C, comprises 21 notches. It is divided into two sections, investment grade and speculative grade. The lowest investment-grade rating is Baa3. The highest speculative-grade rating is Ba1.
Moody ratings Caa1, Caa2, and Caa3 indicate bonds of poor standing and Ca rating indicates highly speculative, or near default.
Written by Omkar Chitnis
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