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Vedanta’s CFO Confident of Meeting Upcoming Debt Maturities; Markets Not as Confident
July 25, 2023
Vedanta Ltd’s CFO Sonal Shrivastava said that the conglomerate was confident of meeting its $2.7bn in debt maturities in the current fiscal and was committed to bringing down its debt. She added that the company’s “high-quality” assets continued to generate healthy cashflows that would help ease repayments. She said that Vedanta’s net debt stood at $7.2bn with an effective interest rate of 8.7% being the cost of debt. With a recovery in commodity markets, he expects Vedanta’s business to improve. Further, she said that they would make “prudent” capital raising decisions given its new foray into the semiconductor manufacturing space.
Vedanta’s dollar bonds were lower by over 1-1.8 points. Vedanta Ltd. reported a 41% drop in its Q1 after-tax profits to $403.6mn. This comes on the back of a steep drop in commodity prices like aluminum and zinc that are down 47% and 37% from their record highs in March and August last year. Besides, Hindustan Zinc also reported a 37% drop in net profits to $239.5mn with lower zinc and lead prices contributing to the drop
While Vedanta expects to repay its dollar bonds, markets are not pricing them all the same. Its 13.875% dollar bond due January 2024 is trading at 86.6 cents on the dollar to yield 48%. However, its 6.125% bonds maturing just 8-months later in August is trading at 62 cents on the dollar to yield 61%, thereby pricing-in a higher risk of non payment.
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