Vedanta Ltd's Strategic Stake Sale in Hindustan Zinc to Ease Debt Burden

Vedanta Ltd announced the sale of its 3.31% stake in Hindustan Zinc Ltd (HZL). The move will generate over Rs 8,000 crore, aiding debt repayment and capital expenditure. This sale will reduce Vedanta's dividend income from HZL but improve the fiscal outlook, according to CreditSights.

Vedanta Ltd's recent decision to sell its 3.31% stake in Hindustan Zinc Ltd (HZL) is set to significantly improve its financial position. The sale, projected to raise over Rs 8,000 crore, is aimed at bolstering funds available for debt repayment and capital expenditure.

Originally, Vedanta's board approved a sale of up to 2.6% in its zinc subsidiary, worth Rs 6,370 crore, but this was later increased to 3.31%. This move will reduce Vedanta's stake in HZL from 64.92% to 61.61% and is seen as a credit positive for the company's creditors and bondholders.

Though the sale will lower Vedanta's future dividend incomes from HZL, CreditSights highlights that it will alleviate the company's elevated interest burden and potentially improve its credit outlook. The firm also reported that Vedanta shelved its steel business sale, focusing on equity fundraises to bridge funding gaps.

(With inputs from agencies.)