Vedanta share price drops nearly 8% after Viceroy Research report

Shares of mining giant Vedanta Ltd cracked nearly 8% on Wednesday, July 9, following a report by short seller Viceroy Research.

At 2:03 pm, the stock was down 3.45% to ₹440.55 apiece on the National Stock Exchange. Intraday, it declined as much as 7.81% to ₹420.65 per share.

Viceroy Research, in a report, said it has shortened the debt stack of Vedanta Resources (VRL), the parent of Vedanta Ltd (VEDL). "The entire group structure is financially unsustainable, operationally compromised, and poses a severe, under-appreciated risk to creditors," it said.

"To service its own debt burden, VRL is systematically draining VEDL, forcing the operating company to take on ever-increasing leverage and deplete its cash reserves," the report alleged, adding that it "erodes the fundamental value of VEDL, which constitutes the primary collateral for VRL’s own creditors."

Vedanta Group calls Viceroy Research report 'malicious'

Shares of Hindustan Zinc, which is a subsidiary of Vedanta, also fell 2.52% to ₹425.20 apiece on the NSE.

On Tuesday, the company, in an exchange filing, said it has received an order from the Office of the Commissioner of Custom, NS I, Maharashtra levying a fine and penalty of ₹12,76,941. The issue is related to the valuations of the goods imported by Hindustan Zinc during the financial year 2019-20.

"Considering the merits of the case, the company intends to file appeal before the Appellate Authority within time-limit prescribed under the Customs Law. The company is hopeful of a favourable outcome thereof and does not expect the said order to have any material financial impact on the company," it added.