Vedanta Resources: Can it repay its debt? How does the debt structure look?
Vedanta Resources is the parent company of Vedanta, a global diversified natural resources group with mining interests in zinc, lead, silver, copper, aluminum, oil and gas, iron ore, steel and commercial power and has listed and unlisted subsidiaries in India and Africa, which are all into mining activities.
In this blog, we discuss the current outstanding debt the company holds in its books and the recent share pledges it has made to fund this ballooning debt parent company Vedanta Resources has taken up in recent times.
As of March 31, the listed entity had a net debt of Rs 45,620 crore or $5.5 billion dollars.
Vedanta has cleared its debt obligations for the first quarter ending March 2023. However, it has done so by pledging 4.4% of its stake to peer and commodities rival Glencore, leading to a capital raise of $450 million.
Vedanta: Existing Debt Profile
According to the latest investor presentation published by Vedanta Resources, the firm as on 30th September 2022 had a total net debt of $11.8 billion and total gross debt amounted to be $15.3 billion, of which 44% was rupee debt and 56% of dollar debt.
| Gross Debt | In $ billion |
| Term Debt | 13.9 |
| Working Capital Debt | 0.4 |
| Short Term Borrowings | 1 |
| Total Consolidated Debt | 15.3 |
| Cash and Cash Equivalents | 3.5 |
| Net Debt | 11.8 |
Vedanta Resources: Entity Wise Debt
The below table shows the entity wise debt for Vedanta Resources until September 2022. The company has multiple subsidiaries listed below.
| Company Name | Gross Debt |
| Vedanta | $5557 million |
| Cairn India Holdings | $118 million |
| Zinc India | $159 million |
| Balco | $257 million |
| Talwandi Sabo | $841 million |
| ESL | $305 million |
| Vedanta Resources | $8088 million |
| Total Gross Debt | $15.27 billion |
Vedanta Resources: Upcoming debt instruments (maturity)
| Maturing Year | Number of bond issues | Outstanding amount |
| 2023 | 8 | $346.2 million |
| 2024 | 2 | $217.7 million |
| 2030 | 1 | $241.9 million |
| 2032 | 4 | $665.8 million |
Source: Refinitiv
Vedanta share price: Historic Performance
| 1-month | 1-year | 5-years | |
| Vedanta | -1% | -13% | 12% |
(Data as on May 31, 2023)
Vedanta Resources: Analyst View
Globally renowned broker JP Morgan downgraded Vedanta to neutral from overweight and also cut down its share price target. The global investment bank maintained an underweight rating on Hindalco but slashed its target price to Rs 205 from Rs 235 earlier.
JP Morgan thinks a sharp decline in the LME zinc prices is likely to be a cause for a challenging year for Vedanta if LME Zinc and aluminum prices do not recover.
This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.