Asian Fixed Income/Frontier Market Research

Bondcritic

Bondcritic, established in 2009, is designed to be an independent credit research voice that helps investors gain insights and unbiased analyses on Asian fixed income market. Our mission is to discover deep-value Asian high-yield and distressed bonds with a bottom-up approach, together with the help of our proprietary ESG (Environmental, Social Development, and Governance) model. At the same time, we focus on bringing investment cases of unrated and unloved issuers to the general public.

Vedanta Resources: ZINCronized Deleveraging

Vedanta Resources PLC: Delisted Yet Uplifted

Vedanta Resources: 9-Month Results on Track

Credit Researcher - South Asia, Bondcritic

Shrey Bhandari

Credit Researcher - South Asia

Credit

<a href="https://www.smartkarma.com/entities/22202" target="_blank" data-smartkarma-citation="entities:22202:1">Vedanta Resources (VED LN)</a> (Vedanta)’s net debt of USD6.4bn for six months ended 30 September 2018 results in a net debt/EBITDA ratio of 3.2x compared to 2.4x a year earlier. We are worried about the company’s rising debt amidst new court orders in India barring it from reopening its subsidiary’s controversial copper plant in the southern state of Tamil Nadu. Vedanta’s subsidiary <a href="https://www.smartkarma.com/entities/514" target="_blank" data-smartkarma-citation="entities:514:1">Vedanta Ltd (VEDL IN)</a> (VL) has also witnessed a sharp decline in its stock price over the past three months due to uncertainty over the plant. Vedanta’s 1HFY19 revenues of USD7.1bn saw a 4% increase compared to the same period last year as a result of higher aluminium sales as well as rising commodity prices. Vedanta’s EBITDA for 1HFY19 stood at USD1.7bn, a 1% increase compared to the same period the year before, driven by the higher oil prices as well as better operating efficiencies. Average production metrics increased across the board, including higher production of oil, aluminium, and steel.
We reiterate our OVERWEIGHT recommendation for the VEDLN complex (21s, 23s and 24s) on its attractive yields versus Indian quasi-sovereign peers and the company’s consistent operating performance.

Vedanta Resources (VED LN) (Vedanta)’s net debt of USD6.4bn for six months ended 30 September 2018 results in a net debt/EBITDA ratio of 3.2x compared to 2.4x a year earlier. We are worried about the company’s rising debt amidst new court orders in India barring it from reopening its subsidiary’s controversial copper plant in the southern state of Tamil Nadu. Vedanta’s subsidiary Vedanta Ltd (VEDL IN) (VL) has also witnessed a sharp decline in its stock price over the past three months due to uncertainty over the plant. Vedanta’s 1HFY19 revenues of USD7.1bn saw a 4% increase compared to the same period last year as a result of higher aluminium sales as well as rising commodity prices. Vedanta’s EBITDA for 1HFY19 stood at USD1.7bn, a 1% increase compared to the same period the year before, driven by the higher oil prices as well as better operating efficiencies. Average production metrics increased across the board, including higher production of oil, aluminium, and steel.
We reiterate our OVERWEIGHT recommendation for the VEDLN complex (21s, 23s and 24s) on its attractive yields versus Indian quasi-sovereign peers and the company’s consistent operating performance.

Vedanta Resources PLC: Holding Firm Despite Rising Net Debt