A giant Indian conglomerate is going through a massive restructuring, offering an opportunity to risky investors.
In the latest development for the restructuring of Vedanta, Chief Financial Officer Sonal Shrivastava resigned. He will be replaced by Ajay Goel, CFO of Byju’s, an India-based tech start-up. Vedanta’s stock price rose 0.86% on the National Stock Exchange of India (NSE), undisturbed by the move.
Vedanta changed CFO three times since 2021. Goel, who will replace Shrivastava on October 30, was Vedanta’s CFO before being let go last April.
Vedanta is going through a major restructuring. Last month, the company announced a six-way split between its operational holdings that will be completed by fiscal year 2025.
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Vedanta has been struggling this year, with S&P Global Ratings downgrading them to "B-" from "CCC". The company’s stock price plummeted over 31% year-to-date and is struggling to repay its financial obligation. Many worry Vedanta will not be able to repay a $4.2 billion bond due in 2025.
What is Vedanta and what will the restructuring look like?
Vedanta is one of the world’s largest natural resources conglomerates. Its operations extend from mining to refining to developing power stations.
Because of its size and wealth, Vedanta can afford to outsource a lot of financial assets to resource-rich countries like Namibia and South Africa. Vedanta’s primary interests, as listed on its official site, are aluminum, zinc, lead, silver, oil and gas, iron, steel, copper, ferroalloys, nickel, glass, and semiconductors.
Their financial centers are divided between India and the United Kingdom, where the conglomerate’s parent company, Vedanta Resources, is based.
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Vedanta’s founder and chairman Anil Agarwal has a personal net worth of $360 million.
In late September, Agarwal announced a massive restructuring of the company in order to manage Vedanta’s debt. The conglomerate will be divided across its operational lines: oil and gas, power, steel and ferrous materials, base metals, and Vedanta Limited.
In a statement, Agarwal said he believed this restructuring would unlock more value for the company’s different operations growth. By the end of the process, Hindustan Zinc’s CEO Arun Misra will become Vedanta’s Chief Executive.
Is it worth investing in Vedanta now?
With a stock price reaching a three-year low, many investors are wondering if it might be wise to hold Vedanta’s share for the moment.
Vedanta’s current dividend yield was 18.50 crore in the last quarter, down from 20.5 in the previous three months. Revenues fell 8.38% quarter-on-quarter while profits declined 41.15% on an yearly basis.
However, dividends are likely to yield increasingly more as the restructuring takes shape. For risky investors who want to diversify their portfolios, Vedanta might be an excellent choice right now.
