Not Distracted by Viceroy Report, Says JP Morgan Maintaining 'Overweight' Rating for Vedanta

A day after US short-seller Viceroy Research called Anil Agarwal-led British firm Vedanta Resources a "parasite" that is "systematically draining" its Indian unit, global investment banker JP Morgan said it is not going to be distracted by the claims and maintains its 'overweight' rating on the company and its bonds.

In a note titled 'Vedanta Resources: Not getting distracted; stay long', JP Morgan on Thursday said it remains comfortable with Vedanta’s leverage position and government's oversight of Hindustan Zinc, an arm of Vedanta Ltd.

"We have generally focussed on Vedanta Ltd’s cash flows and earnings excluding Hindustan Zinc to unravel the key drivers of the credit. VDL (ex-HZL) reported EBITDA of USD 3.1 billion in FY25 and a net leverage of 2.2x. We struggle to see financial stress at VDL with these metrics. For HZL, net leverage was 0.1x. HZL has capex plans and we see net leverage going up to 0.5x," the note said.

Vedanta is cheap within the Asian and emerging market metals and mining space supported by healthy EBITDA generation, improved funding access with approximately USD 1 billion bank loans raised by Vedanta Resources in FY26, and attractive yields, it added.

Speaking at the AGM on Thursday, company's chairman Anil Agarwal said "As far as this report (Viceroy Research ) is concerned, we are so transparent. We remain transparent and believe in disclosures and this is our strength. This (report) is motivated and we will deal with it." Vedanta Resources Ltd CEO Deshnee Naidoo had said there is no new information in the report that the company had not voluntarily shared with the shareholders previously.

"The authors of the report have compiled only part information filled with gross inaccuracies, which you have also discerned as part of this meeting," he added.

The US firm took a short position against the debt of Vedanta Resources, the UK-based parent of Indian miner Vedanta Ltd, alleging that the group "is a house of cards built on a foundation of unsustainable debt, looted assets, and accounting fiction." "Vedanta Resources Ltd (VRL) is a 'parasite' holding company with no significant operations of its own, propped up entirely by cash extracted from its dying 'host': Vedanta Ltd (VEDL)," Viceroy had said in an 85-page report on Wednesday.

Vedanta responded saying the report was "a malicious combination of selective misinformation and baseless allegations" and that its authors issued it without contacting the group.