Why Vedanta Share Price is Falling

Vedanta shares slipped 5% in intraday today in an otherwise upbeat market.

Sustained foreign investor inflows and positive expectations on macroeconomic trends kept benchmark indices in the green. However, there were individual stocks that went against the tide.

So, what was the reason behind the drop Vedanta's share price?

The company's shares traded ex-dividend today. The ex-dividend date is the day on which the company's stock trades excluding dividends, meaning it will not carry the value of its next dividend on or after the said date.

On 22 May 2023, the company had declared its first interim dividend of Rs 18.5 per share for the financial year 2023-24.

The record date for the same was 30 May 2023.

It is pertinent to note that a dividend is deducted from the price of the stock on the ex-dividend date.

Thus, Vedanta is not down by 5% today. In fact, if we consider the ex-dividend price of Vedanta, it is trading higher marginally.

However, if we take a longer look at Vedanta's share price, the stock has been under pressure since the beginning of the year. In 2023 it has fallen by 9.8%. In the past one year, it is down by 8.9%.

Let's find out why the company's shares have been falling.

#1 Poor quarterly results

During the March 2023 quarter, the company's revenue from operations dropped 5.4% YoY to Rs 372.3 bn.

The company also reported a 67.5% year-on-year (YoY) drop in net profit at Rs 18.9 billion (bn). The steep downfall can be attributed to a one-time charge in its oil and gas business.

The company booked an exceptional loss of Rs 13.4 bn mostly on account of impairment in the oil and gas business and payment of windfall tax on oil produced from the Rajasthan block.

#2 Stake sale by promoters

In March 2023, the promoters also sold a 1.5% stake in the company. Total promoter stake at the end of March 2023 stood at 68.1%.

Promoter holding in a company indicates the promoter's trust in the future of the company. When promoters buy shares in a company it is believed that something good or big is about to happen.

Similarly, when promoters sell, the market believes that the promoters do not trust the company to do well, at least in the near term.

#3 Consistent FII selling

Another reason behind the decline is continuous selling by foreign institutional investors (FIIs).

FIIs have continuously sold stakes from Vedanta in the last three quarters. FII holding stood at 10.3% in the June 2021 quarter. It now stands at 7.9%.

Look at the table below.

Vedanta FII holding (June 2021 - March 2023)

Quarter ending	Jun-21	Sep-21	Dec-21	Mar-22	Jun-22	Sep-22	Dec-22	Mar-23
Total FII holding (%)	10.29	8.69	8.67	9.35	8.68	8.09	7.9	7.88

Source: Equitymaster

How Vedanta shares performed recently

Vedanta's share price fell by 6.6% in the past six months. In 2023 so far Vedanta is down 9.77%.

In the last one year, it is trading lower by 8.9%

Vedanta touched its 52-week high of Rs 340.8 on 20 January 2023. Its 52-week low was Rs 206.1 touched on 01 July 2022.

About Vedanta

Vedanta is a diverse natural resource company that explores, extracts and processes minerals as well as oil and gas.

The company explores, produces, and sells zinc, lead, silver, copper, aluminium, iron ore, and oil and gas.

Vedanta's other businesses include commercial power generation, steel manufacturing, and port operations in India, as well as glass substrate manufacturing in South Korea and Taiwan.

Vedanta is committed to achieving net-zero carbon emissions by 2050 or sooner and has promised US$ 5 bn over the next ten years to accelerate the transition.

Vedanta has also launched Spark 2.0 in line with its mission to support startups. Startups chosen for the program will collaborate with Vedanta's group companies, which have operations on three continents.

For more details, checkout the Vedanta company fact sheet and Vedanta News and Analysis.

We have recently covered a detailed dividend editorial comparing Vedanta and NALCO. Do take a look.

You can also compare Vedanta with its peers.

Vedanta vs Hindalco

Vedanta vs Hindustan Copper

Vedanta vs Hindustan Zinc

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...