Shares of Vedanta Ltd surged 10 per cent after the company said its board will consider delisting the firm. At 9.34 am, the stock was at Rs 94 on the BSE, up 5 per cent from its previous close.
The promoter group, including Vedanta Resources, owns 50.14 per cent of Vedanta Ltd, while the remaining 49.48 per cent is held by the public.
Vedanta has made an offer of Rs 87.50 a share, which is a 2 per cent discount to Tuesday’s closing price. At the offer price, the company would have to pay Rs 16,200 crore to public shareholders. As of September, Vedanta had an outstanding net debt of $6.6 billion. The company has debt maturities of $1.9 billion till September 2021 and an annual interest payment of $400 million. To meet its interest obligation, it relies on brand fees and dividend from Vedanta. The board will meet on 18 May to consider the delisting, Vedanta informed the exchanges. In 2018, the company was delisted from the London Stock Exchange by its promoters.
‘The sharp correction in commodity prices due to an impact on demand from the COVID-19 pandemic does not bode well for the near-term earnings outlook,’ Motilal Oswal report said in a note. Focus on reducing the cost of production, particularly in the aluminum business through higher captive bauxite and coal linkages, should help partially cushion the adverse impact on margins from lower prices, the brokerage firm said.
High debt at Vedanta parent entity continues to raise concern, Motilal Oswal said, while maintaining a ‘neutral’ rating with a target price of Rs 85 a share.
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