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Vedanta To Raise up to ₹6,688 Cr via QIP to Reduce Debt and Expand Capex

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Synopsis:

Vedanta launches QIP to raise ₹6,688 crore, setting the floor price at ₹461.26 per share. Funds will reduce debt and support a $1.9 billion capital expenditure plan for FY24. Vedanta share price closed at ₹459.40 on Monday, up 2.21%.

Vedanta QIP News Today

On July 15, mining conglomerate Vedanta Ltd announced the launch of a qualified institutional placement (QIP) to raise up to ₹6,688 crore, setting the floor price at ₹461.26 per equity share. On Monday, Vedanta share price closed at ₹459.40, up by ₹9.95 or 2.21% on the BSE.

Shareholder Approval and Fundraising Goals

This fundraising initiative follows shareholder approval on June 21 to raise up to ₹8,500 crore. The company's board had approved raising funds through equity and other equity-linked instruments in May. The base size of the QIP is ₹5,016 crore, with a greenshoe option of an additional ₹1,672 crore.

Impact on Promoter Holdings and Lock-In Period

At the base price, the promoter's dilution will be 3.1% of the total equity, increasing to 4.1% if the greenshoe option is exercised. Post-QIP, there will be a 60-day lock-in period for promoters and the company.

Financial Performance

Vedanta recently reported a 27% drop in net profit for Q4 FY24 due to declining metal prices and subdued performance in the oil and gas segment.

Explore: Vedanta Limited Share Price

Utilisation of QIP Proceeds

The primary goals of the QIP are debt reduction and funding ongoing capital expenditures. Vedanta's capital expenditure target for the current fiscal year is $1.9 billion, up from $1.4 billion last year. The funds raised will also help retire high-cost debt, potentially boosting the company's profits.

Debt Profile

As of March 2024, Vedanta had a consolidated net debt of ₹56,338 crore and a net-debt to operating profit ratio of 1.5 times. The company's gross debt stood at ₹71,759 crore, with 82% in Indian rupees and the remainder in foreign currencies. Vedanta's debt structure includes ₹69,062 crore in term debt, ₹1,159 crore in working capital loans, and ₹1,538 crore in short-term borrowings.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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