Vedanta shares in focus as parent takes $850 mn loan to reduce debt

Shares of metal and mining major Vedanta Ltd are in focus today amid a report which said its parent Vedanta Group took a fresh loan for about $850 million, to reduce debt. The stock traded at Rs 289.65 today against the previous close of Rs 288.40 on BSE. Market cap of the firm fell to Rs 1.06 lakh crore.  

Vedanta stock has fallen after 3 days of consecutive gain. In a year, the stock is down 5.35% and fallen 6.16% this year. It hit 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 59.7, signaling neither the stock is overbought nor oversold. The stock has a one-year beta of 1.5, indicating very high volatility during the period. The PE ratio of Vedanta stands at 10.27 signaling the stock is undervalued compared to its industry. The PE of the mining industry stands at 14.39.

Vedanta stock is trading higher than the 5 day, 20 day and 50 day moving averages but lower than 100 day and 200 day moving averages.

The mining firm has inked a five-year deal with JPMorgan Chase & Co. and Oaktree, according to a Bloomberg report.  

Investors are tracking the group’s debt load, as rising interest rates intensify pressure on junk-rated borrowers. The transaction has taken place just days before Vedanta Resources Ltd has to pay back a $500 million bond. 

Currently, the large cap stock is stuck in the grip of bears, according to technical indicators and analysts.  

Commenting on the technical outlook of the stock,  Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One said, "Vedanta is in a consolidation phase ranging from Rs 270-290 odd levels. On the technical front, the stock is hovering just above its major EMAs (exponential moving averages) on the daily chart, which construes a positive setup for the counter. However, until we witness a range breakout, the trajectory remains sideways."  

Gaurav Bissa, VP, InCred Equities said, "Vedanta is trading at middle of range of box pattern with strong hurdle at Rs 440 and support at Rs 205 levels. It is expected to continue witnessing time correction for next few months as fresh trigger will come once it breaches either of the swing levels mentioned earlier. The cues are mixed on daily charts as well where it has been in a narrow range since Feb 2023. The stock will pick up pace once it gives a close above its 200DEMA placed at Rs 295 levels, which can then push it towards Rs 330 levels. Till it does not give a close above its 200DEMA, it is expected to trade in the Rs 260-295 range."  

 

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