Shares of Vedanta Ltd are in focus today after India Ratings and Research downgraded the firm’s ratings for the long-term bank facilities and debt instruments. The ratings have been downgraded to ‘IND AA-‘ from ‘IND AA’, Vedanta said. Vedanta shares ended 2.50% higher at Rs  227.50 on October 11 against the previous close of Rs 222.15 on BSE. Market cap of the firm stood at Rs 84,640 crore. A total of 12.50 lakh shares of the firm changed hands amounting to a turnover of Rs 28.36 crore on BSE. Vedanta shares have a one-year beta of 1.1, indicating high volatility during the period.  

In terms of technicals, the relative strength index (RSI) of Vedanta stands at 49.1, signaling the stock is trading neither in the oversold nor in the overbought territory. Vedanta shares are trading higher than the 5 day, 10 day, 20 day but lower than the  30 day, 50 day, 100 day, 150 day and 200 day moving averages. 

“India Ratings and Research has placed these ratings on Rating Watch with negative implications while reaffirming the ratings on the short-term debt instruments of the company at IND A1,” the company said. 

Vedanta stock fell to a 52-week low of Rs 207.45 on September 28, 2023 and a 52 week high of Rs 340.75 on January 20, 2023.  

Vedanta shares have lost 28% this year and fallen 20% in a year.    

“The downgrade reflects Vedanta’s increased liquidity risk and reduced financial flexibility on account of delays in tying up the refinancing for managing its large upcoming bond maturiries in January 2024 and financial year 2024, which could potentially impact the company’s liquidity and financial flexibility in the interim,” said India Ratings analysts in a note. 

India Ratings further attributed the downgrades to lower-than-expected cash accruals at Vedanta owing to corrections in the commodity cycle together with the higher cost of borrowing for the latest bond issuance, which can impact the company’s liquidity cover as well as its ability to support its company Vedanta Resources Ltd. 

Vedanta logged a 40% decline in net profit to Rs 3308 crore in the first quarter. Revenue fell 13% to Rs 33,242 crore in Q1 from Rs 38,251 crore during Q1FY23. The company declared an interim dividend of Rs 18.5 per share.       

Vedanta Ltd is a subsidiary of Vedanta Resources Ltd and has operations in oil and gas, zinc, lead, silver, copper, iron ore, steel, and aluminium and power across India, South Africa and Namibia.

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