On Wednesday, the largest mining ore company’s shares fell 6 percent to a 52-week low of Rs 210 per share after Moody’s Investor Service downgraded the company’s rating from Caa1 to Caa2. 

At 12:48 p.m., Vedanta Ltd shares were trading at Rs 210.80 a share, a decline of Rs 13.25 or 5.92 percent on the National Stock Exchange from the previous close price. The company has a market capitalization of Rs 78,618 crore. 

As per the reports, Moody’s Investors Service downgraded Vedanta Resources Limited’s (VRL) corporate family rating (CFR) from Caa1 to Caa2 over elevated risks of debt restructuring over the next few months. The firm has made no significant headway in refinancing its approaching debt maturities, particularly the $1 billion notes expiring in January 2024 and August 2024. 

Moody’s has also downgraded to Caa3 from Caa2 the senior unsecured bonds issued by Vedanta Resources and those issued by Vedanta Resources’ fully owned subsidiary, Vedanta Resources Finance II Plc, and guaranteed by Vedanta Resources. 

The negative outlook reflects the company’s persistent weak liquidity profile and Moody’s concerns about the company’s ability to meet its immediate financial demands, according to Moody’s. 

According to Moody’s, Caa signifies liabilities that are speculative in nature and exposed to very high credit risk, with the modifier ‘1’ indicating the highest end of the rating category and ‘3’ suggesting the lower end rating category. 

The company’s revenue has decreased by 13 percent yearly, from Rs 38,622 crore in Q1FY23 to Rs 33,733 crore in Q1FY24. In the same time frame, the company’s net profit declined by 41 percent, from Rs 5,592 crore to Rs 3,308 crore. 

In the recent financial year, the company reported a net profit margin of 9.84 percent and an operating margin of 18.13 percent. 

According to the recent shareholding pattern, the company promoters hold 68.11 percent of the company, while Foreign institutional investors hold 7.48 percent and Domestic institutional investors hold a 10.05 percent stake.

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. 

Written by Omkar Chitnis


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