In the last week of February 2023, share price of Vedanta almost fell by 10% because Vedanta resources, Vedanta Ltd’s unlisted parent company has about $7.7B in debt outstanding. Their bond price has come down due to a sudden increase in the bond yield because of stress/fear of default of payment due in June 2023.
Earlier the promoter wanted to sell its zinc business to Hindustan Zinc at $3B, however, they were not successful because of the government interventions. If that would have happened, the dividend on sale would go to its parent company (Vedanta resources) and they would easily pay off their debts because a large chunk of $2B is due in June 2023. Nonetheless, India operations CFs are strong but the timing of payment is an issue.
New Development on 28-2-2023,
At the current levels, the share price of Vedanta is showing a positive trend. This could be further substantiated by the company’s response that they are ready to meet the upcoming maturities for the June 2023 payment outstanding by taking a fresh loan of $1B and $750m bilateral facilities.