Mining giant Vedanta Ltd has announced the start of its qualified institutional placement (QIP) issue, setting a floor price of Rs 461.2 per share.
The goal of this fundraising is to reduce the company’s debt and cover some capital expenditure needs. According to an earlier report by ET, the QIP could raise up to Rs 6,000 crore.
Previous Fundraising Plans
In May, Vedanta revealed plans to raise up to Rs 8,500 crore to cut down debt, which shareholders approved last month.
Capital Expenditure and Growth
Vedanta is working on several growth projects and has a long-term capital expenditure plan of around $8 billion. For this fiscal year, the company aims to spend $1.9 billion, which is over a third more than the $1.4 billion spent last year. The funds raised will help continue these projects and may also be used to pay off high-interest debt from recent years, potentially increasing profits, according to a source.
Global Operations
Vedanta operates in India, South Africa, Namibia, Liberia, UAE, Korea, Taiwan, and Japan. The company is involved in oil and gas, zinc, lead, silver, copper, iron ore, steel, nickel, aluminium, power, and glass substrate. It is also expanding into semiconductors and display glass.
Debt Status
As of March 2024, Vedanta’s net debt was Rs 56,338 crore at the consolidated level, with a net-debt to operating profit ratio of 1.5 times. The company’s gross debt was Rs 71,759 crore, with 82% in Indian rupees and the rest in foreign currency. This includes Rs 69,062 crore in term debt, Rs 1,159 crore in working capital loans, and Rs 1,538 crore in short-term borrowings.
Stock Performance
On Monday, Vedanta’s shares closed nearly 3% higher at Rs 461.95 on the NSE.
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