Shares of Vedanta Ltd rose by over one percent in early trade today after the company announced that it had repaid $800 million of loans taken from Standard Chartered Bank against the company’s shares. The mining giant said that all debt repayments coming up in the current cycle have been made and there was no outstanding amount, which subsequently released the encumbrance on all shares. The repayments also reduced the company’s gross debt to $6.8 billion.
Vedanta stock rose 1.32% to Rs 278.45 against the previous close of Rs 274.80 on the Bombay Stock Exchange (BSE). The market cap of the firm rose to Rs 1.03 lakh crore. In a year, the stock is down 23% and has fallen 10% this year. It hit a 52-week high of Rs 372 on May 6, 2022, and a 52-week low of Rs 206.10 on July 1, 2022.
In terms of technicals, the relative strength index (RSI) of Vedanta stands at 44.5, signaling that neither the stock is overbought nor oversold. The stock has a one-year beta of 1.6, indicating very high volatility during the period. Vedanta shares are trading higher than the 20-day moving averages but lower than 5-day, 50-day, 100-day, and 200-day moving averages.
The price-to-earnings (PE) ratio of Vedanta stands at 7.12 signaling that the stock is undervalued compared to the industry. The PE of the mining industry stands at 14.39.
The repayments released the encumbrances created on the shares of its unit Vedanta Ltd. In late April, the company had paid all loans and bonds due last month, cutting its gross debt to $6.8 billion. Vedanta Resources Limited announced that it had paid all its maturing loans and bonds due in April 2023, thereby reducing its gross debt by a further $1 billion.
In its Q4 update, the Mumbai-based mining company said that its total aluminium production remained almost flat. Vedanta said total aluminium production rose 0.3 percent at 574 kt in Q4 as compared to 572 kt in the same period last fiscal. It also added that the cast metal aluminium production rose 1 percent quarter-on-quarter with Jharsuguda ramp up.
The firm will announce its Q4 and annual earnings for the fiscal year ended March on May 12, 2023.
Vedanta Ltd. is a diversified natural resources company with operations across India, Zambia, Namibia, South Africa, Ireland, and Australia. The company is engaged in the exploration, mining, and production of metals, oil and gas, and power generation. It is a subsidiary of Vedanta Resources Limited, a London-listed global metals and mining company.
The recent rise in the stock price of Vedanta Ltd. follows a period of consecutive falls, which had seen the stock price drop by 3% over the course of three days. The company’s announcement that it had repaid $800 million of loans taken from Standard Chartered Bank against the company’s shares was a key factor in the rebound of the stock price.
The repayment of debt has also led to the release of encumbrances on all shares of Vedanta Ltd., providing investors with greater clarity on the company’s financial health. This has boosted investor confidence, leading to the rise in the stock price.
In addition to the news of the debt repayment, the technical indicators of the stock are also worth noting. The relative strength index (RSI) of Vedanta Ltd. currently stands at 44.5, indicating that the stock is neither overbought nor oversold. The one-year beta of Vedanta Ltd. is 1.6, suggesting very high volatility during the period. The PE ratio of Vedanta Ltd. is 7.12, indicating that the stock is currently undervalued compared to the industry.
