US short seller calls Vedanta Resources ‘financially unsustainable’, shares tumble nearly 8 per cent

Billionaire Anil Agarwal’s company denies allegations, says report aimed at manipulating market sentiment for profit

New Delhi: Shares of Vedanta Ltd tumbled nearly 8 per cent on Wednesday after US short seller Viceroy Research released a report charging billionaire Anil Agarwal’s mining conglomerate to be “financially unsustainable” and posing a severe risk to creditors.

The stock tanked 7.71 per cent to Rs 421 on the BSE. At the NSE, it dropped 7.81 per cent to Rs 420.65. But later, the stock recovered some of the losses to trade 3.31 per cent down at Rs 441.10 on the BSE.

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Viceroy said it was shorting the debt stack of Vedanta Resources, the parent company and majority owner of Mumbai-listed Vedanta Ltd, as it released the 85-page report.

Shorting debt, also known as short selling of bonds, is a trading strategy where an investor looks to profit from a decline in the price of bonds or other debt instruments. It involves borrowing the bond, selling it at the current market price, and then buying it back later at a potentially lower price to return to the lender, pocketing the difference as profit.

Calling Vedanta Resources Ltd (VRL) a “heavily indebted parent”, Viceroy said, “The entire group structure is financially unsustainable, operationally compromised, and poses a severe, under-appreciated risk to creditors”.

Responding to the report, Vedanta in a statement said, “The report is a malicious combination of selective misinformation and baseless allegations to discredit the Group”.

“It has been issued without making any attempt to contact us with the sole objective of creating false propaganda. It only contains a compilation of various information, which is already in the public domain, but the authors have tried to sensationalise the context to profiteer from market reaction,” it said.