Vedanta's change in fortunes — From failed delisting at ₹87 to stake sale at ₹440

Vedanta's change in fortunes — From failed delisting at ₹87 to stake sale at ₹440

Vedanta Resources Plc, the parent company of Vedanta Ltd., intended to delist shares of the Indian entity just four years ago in 2020 at a price of ₹87.5 per share. On Wednesday, one of the promoter entities sold a stake at ₹440 per share, 5X that price.

A spokesperson of Vedanta Resources on Wednesday confirmed that Finsider International Company Ltd., a subsidiary of Vedanta Resources Ltd., sold a 2.6% stake in Vedanta Ltd. to deleverage the balance sheet and to fund its strategic growth initiatives. Based on the average price, Vedanta Resources would have raised ₹4,408 crore through this stake sale.

Interestingly, this comes just a week after Vedanta Group Chairman Anil Agarwal told CNBC-TV18 that there is no such plan to bring the stake down from the current level of 61.95%. He left a caveat in that statement, stating that if an investment banker comes and gives an idea, they'll work on it.

This isn't the first time that promoters of Vedanta have sold a stake. Over 18 months, they've sold nearly 10% of equity. Starting December 2022, when the promoter holding in Vedanta was just under 70% if we take today's sale into account, that figure will now drop to sub-60%.

In August last year, the promoter Twin Star had sold a 4.1% stake and pocketed nearly ₹4,000 crore and just earlier this year, Finsider International, the same entity that sold a stake today, had sold close to a 2% stake for just over ₹1,700 crore.

Based on these three stake sales in the past 18 months, promoters of Vedanta have raised over ₹10,000 crore from the Indian entity, and that is excluding the generous dividend payouts.

Now for some throwback. Back in October 2020, Vedanta's promoters wanted to delist the stock. The proposal was to acquire a majority stake from public shareholders, at a price of ₹87.5 per share. But on October 9, 2020, the delisting failed. Why? Because it could not get the required number of shares tendered for the delisting to be successful.

Interestingly, while the delisting price was ₹87.5, the majority of the bids were placed at ₹320 per share for the delisting. Even from those levels of ₹320, the stock is up almost 40%.

Now how has the stock done since that failed delisting? Between October and December 2020 itself, the stock rose 18%. Benefitting from the commodity upcycle, the stock doubled in 2021. After two years of negative returns in 2022 and 2023, the stock is already up 70% so far this year.

Analysts too are starting to warm up to the stock. In just nine months, the number of sell recommendations on the stock has come down from 42% in September last year to just 7%.

Shares of Vedanta have risen 70% so far this year but are trading with losses on Wednesday after the block deal.