Shares of Vedanta Ltd soared by more than 3% on Friday after ratings agency S&P Global upgraded its rating on parent firm Vedanta Resources and hopes of a strong dividend set to be announced at an upcoming meet.
What Happened: On Thursday, S&P Global upgraded mining conglomerate Vedanta Resources to ‘B-‘ From ‘CCC+' on the back of improving capital structure and liquidity.
The ratings agency was upbeat about Vedanta Resources' ability to meet $1.4 billion (₹11,721 crore) in debt maturities due by December 2025.
At the end of June, the company raised around $500 (₹4,186 crore) million by selling a 2.6% stake in its subsidiary Vedanta Ltd. This, along with potential dividends and brand fees from its subsidiary, should enable the company to meet its obligations without the need for additional external debt, S&P said.
It estimates Vedanta Resources' debt level to shrink by another $1 billion (₹8,372 crore) to about $4.5 billion (₹37,676 crore) in the next 12 months.
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"Debt reduction at Vedanta Resources is gradually making the company’s capital structure more sustainable'" the agency added.
S&P Global's stable outlook is indicative of its expectations that the company will proactively manage its $1.2 billion (₹10,046 crore) debt maturing in 2026. Additionally, the outlook reinforces the agency's positive assessment of the company's underlying operations, which is likely to aid in its refinancing efforts.
"Downside rating pressure could emerge if Vedanta Resources’ liquidity position deteriorates and refinancing risks increase," the company additionally cautioned.
The rise in the Vedanta's share prices also coincides with Friday's board meeting. Earlier this week, the company said the meeting would be conducted to consider and approve the second interim dividend for FY25.
Price Action: Vedanta Ltd was trading 3.19% higher at ₹444.65 on Friday morning.
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