Home / Markets / Stock Markets /  Vedanta shares slump 21% after failed delisting

MUMBAI: Shares of Vedanta Ltd fell 21% on Monday following its failed attempt at delisting its shares from the stock exchanges.

Vedanta shares closed at 96.95 apiece, down 20.60% from its previous close, while the benchmark Sensex closed at 40593.80 up 0.21%.

Due to high debt on its books and failure to delist, experts believe that the stock will remain under pressure for the foreseeable future.

On Saturday, promoter Vedanta Resources deemed the delisting offer to have failed after lower than required shares were offered. A total of 125.47 crore shares were tendered by shareholders against the 169.73 crore shares sought by promoters.

There were close to 12.32 crores shares that were categorised as ‘Unconfirmed Bids’. These bids were the boundary line in determining the success of the price discovery process.

Since these remained unconfirmed till the closure of the bidding period, the 90% threshold could not be achieved, resulting in failure of delisting.

Vikas Jain, Sr. Research Analyst, Reliance Securities said "The delisting for Vedanta has failed as the floor price was very low and in the reverse book building it could not get the desired quantity. We believe as the share price has already declined by 20% over the past 3 days and buyback is being cancelled we could see some bounce back to near term highs of 140 levels. As the metal sector has seen upswing over the past few months with commodities prices higher the outlook remains positive."

All equity shares tendered in the delisting offer shall be returned to the respective public shareholders, the company said.

In May, Vedanta Resources Ltd had expressed its intention to delist the shares of Vedanta from the BSE and National Stock Exchange. It believed that a delisting will provide the group with enhanced operational and financial flexibility in a capital intensive business. In June, Vedanta had received shareholders' approval for the delisting.

The company's consolidated net profit declined 23.5% year-on-year to 1,033 crore in the quarter ended June while revenue from operations fell 25.9% to 15,687 crore.

Vedanta Ltd, a subsidiary of Vedanta Resources, is among the world's leading diversified natural resource companies with business operations in India, South Africa, Namibia, and Australia.

As per the delisting regulations the company and minority shareholders will have to wait for at least 6 months before the company can reattempt to delist.

“The company had taken loans to help it in delisting. Now it will have to service this debt which will continue to add pressure to the books of the company," said a minority investor declining to be named.

According to Amit Tandon, chief executive, institutional investor advisory services the operating companies are fine and it's the holding company which remains under pressure.

“This entire exercise on a fair assumption must have set Vedanta back quite a lot, which would require serious amount of restructuring," said Tandon

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Recommended For You
Edit Profile
Get alerts on WhatsApp
Set Preferences My ReadsFeedbackRedeem a Gift CardLogout