Vedanta Experienced A Huge Setback in Stock Price

By Advisorymandi
25-May-2018 12:56:47 PM
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Vedanta Experienced A Huge Setback in Stock Price

Recently, the Vedanta shares showed a major fall in its stock price that comes as a result of at least eleven people were killed and several wounded when the Tamil Nadu police opened fire at violent protesters urging for the closure of a copper smelter run by Vedanta Resources Plc.

It has been over three months with protesters raising concern against the copper smelter alleging it as a major source of groundwater and air pollution and causing risk to fisheries. The smelter controlled by Vedanta Ltd is a subsidiary of London-listed Vedanta Resources. Some local politicians and environmental activists are putting pressure on the government to shut down the plant permanently.

In February, the company filed an application to get the environmental clearance looking to expand its plant in the coastal city, requires increasing the capacity of the smelter to 800,000 tonnes per year. Madras High Court put a stay on the expansion of Vedanta’s Sterlite industrial plant in Tuticorin, Tamil Nadu.

Sterlite Copper is a Vedanta Company, being in existence in the port city from about two decades. There are several petitions pending in court against the operation of Sterlite Copper in Tuticorin. Tamil Nadu Chief Minister Sri Edapaddi K Palaniswami has ordered a judicial inquiry into the incident and announced compensation of Rs 10 lakh each to the families who have to face the pain of demise of their loved ones during the protest.

During the closure of the plant, the company has estimated to suffer a production loss of 35,000 tonnes per month. When it comes to ethical grounds, the company may have to suffer on attracting investments, especially from foreign investors.

Impact on stock market

Due to agitation against the closure of Vedanta’s copper plant, its stock prices have experienced a huge setback. The share price of Vedanta Limited hit an intra-day low level of Rs 253.75. On NSE, its stock prices go down as much as 6 percent during the intraday trade.

If the plant remains closed for a quarter, the share prices will dip by Rs 4-5 from the target price. If it stays shut for a year, the stocks will get the hit by around Rs 16 per share.

Final Thoughts:

Protests calling for shutting down Sterlite Tuticorin copper plant has lead Vedanta’s shares sink by almost 6 percent at a level last seen 10 months ago in July last year. Its stock prices have reached to an intraday low of Rs 253.75 per share.

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Author: Advisorymandi

AdvisoryMandi is India's most trusted Stock Market Advisory marketplace covers NSE, BSE, MCX & NCDEX. Invest with confidence and harness the power of AdvisoryMandi to make smarter investment decisions in Stocks, Indices, Commodities, Forex & IPO.

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3 Comments on "Vedanta Experienced A Huge Setback in Stock Price"

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Karan Singhania
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Karan Singhania
1 year 10 months ago

Latest News! The State Industries Promotion Corporation of Tamil Nadu has made a decision of cancel allotment of 332 acres for the 2nd phase expansion of the Tuticorin Copper Smelter in a letter sent to Vedanta.
I am sure Vedanta saw that coming.

Amit Sharma
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Amit Sharma
1 year 10 months ago

Yeah! Let’s see, if the closure of Vedanta Resources put any effect on its cash flows or S&P Global Ratings or not. But, Vedanta certainly needs to reconfigure its financing. What do you think Karan?

Savya Khurana
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Savya Khurana
1 year 10 months ago

Well, the protestors finally succeed to shutdown Tuticorin Copper Smelter. Hard work paid off! Thanks for sharing this.

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