After the mining company announces the allocation of shares worth Rs 2,500 crore, Vedanta stock jumps by around 7%

 After the mining company announces the allocation of shares worth Rs 2,500 crore, Vedanta stock jumps by around 7%

After falling to a 52-week low of Rs 207.85 per share on the BSE on Thursday (September 28), Vedanta shares rose on Friday (September 29).

After falling to a 52-week low the previous day, Vedanta Limited shares recovered and surged 6.84 percent, or Rs 14.25, higher on Friday (September 29, 2023), closing at Rs 222.55 per share on the BSE. A day after the company disclosed that it was issuing preferential shares worth Rs 2,500 crore, the shares saw a significant increase.  

The company has completely allotted 2,50,000 no. secured, unrated, unlisted, refundable, non-convertible debentures ("NCDs") of face value Rs. 1,00,000/- each amounting to Rs. 2,500 Crores, according to a BSE filing from Vedanta on Friday. The date of allotment has been changed to September 27, 2023, and depository verification for credit of NCDs has been received on September 28, 2023.

The mining company's stock, which opened the day at Rs 210.00 and reached a high of Rs 224.85, was still performing well as of the time this story was being written.

Stock performance of Vedanta 

The increase in the share price on Friday was a welcome change from how it had performed the day before, when it had dropped to a 52-week low of Rs 207.85. The shares have fallen 1.24 percent over the past five days, after a substantial increase on Friday. They have decreased 5.94% over the past month, 19.00% over the past six months, 29.61 over the past year, and 17.61 over the past year.

It has lagged the benchmark Nifty 50, which has increased 7.92% year to date, 14.88% over the past year, 1.50% over the past month, 13.13% over the past six months, and flat over the last five sessions.

Why Vedanta stock has been in trouble

Since its parent firm, Vedanta Resources, is still heavily indebted, Vedanta Ltd shares have not been performing well. Despite the corporation paying off all of the bonds and loans that were due to mature in May and June, the debt level is significant. The debt was drastically slashed by $3.3 billion from March 2023 to $6.4 billion.      

What steps is Vedanta doing to heal?

According to Zee Business Research, Vedanta is making efforts to stop its decline. A agreement to demerge its businesses is apparently close to being finalized by the organization. It intends to divide these companies into distinct listed corporations.

The company will demerge its activities in oil and gas, metal, power, and aluminum.

The corporation thinks the demerger will improve the effectiveness of controlling the group debt.

According to the study, the board of the group has given the board's committee of directors permission to consider corporate reorganization.

Additionally, it will have distinct legal organizations for its recycling, lead, silver, and zinc businesses. 

In addition, due to the company's enterprises' significant potential, the corporate structure will be evaluated.

The group is open to receiving advice from outside sources, and the management will also name an outside advisor to assess the choices.

The directors' board's strategic goals

Unlocking stakeholder value, creating the ideal capital structure and capital allocation, and honed focus on core capabilities will be among the strategic goals of the board of directors.