Vedanta drops 3% after US short seller calls it ‘house of cards’, firm hits back

MUMBAI: In a move reminiscent of Hindenburg going short on Adani Group, US-based financial researcher Viceroy Research said Wednesday it was “shorting” the debt stack of metal tycoon Anil Agarwal-controlled Vedanta Resources, the UK-based parent of Mumbai-listed miner Vedanta, as it believes the entire group structure is ‘financially unsustainable’, operationally compromised, ‘a house of cards’, poses severe risks to creditors, and ‘resembles a Ponzi scheme’. Viceroy’s 87-page report came ahead of Vedanta’s annual shareholder meeting on Thursday. The company dismissed the report as “a malicious combination of selective misinformation and baseless allegations.” Vedanta’s stock price on BSE crashed nearly 8% in mid-session to a low of Rs 421, but then slowly recovered to close at Rs 441, down 3.4%.The stock of Vedanta subsidiary Hindustan Zinc also saw a similar trend: In mid-session it crashed nearly 5% to Rs 415 and then recovered some ground by the close of the session to finally settle at Rs 425, down 2.6%. Betting on a correction in the prices of the company’s securities, Viceroy’s report said, “Our thesis rests on a simple but critical dynamic: Vedanta Resources is a ‘parasite’ holding company with no significant operations of its own, propped up entirely by cash extracted from its dying ‘host’, Vedanta.” This, Viceroy added, has forced the Indian company to take on increasing leverage and deplete its cash reserves. “This looting erodes the fundamental value of Vedanta, which constitutes the primary collateral for Vedanta Resources’ own creditors.”

Vedanta reacted saying the “timing of the report is suspect and could be to undermine the forthcoming corporate initiatives”. Vedanta is in the midst of hiving off its businesses such as aluminum, oil and gas, power, and base metals into separate listed companies. The demerger has hit a regulatory roadblock with the petroleum and natural gas ministry raising objections. Anil Agarwal and his family hold about 56% stake in Vedanta. A couple of days ago, Vedanta Resources announced the release of all pledged Vedanta shares following complete repayment of its $200 million Canara Bank (London branch) loan. Viceroy criticised Vedanta’s demerger proposal, initiated after an unsuccessful attempt to take the Indian company private five years ago. As of March 31, 2025, Vedanta Resources’ standalone net debt was about $5 billion. Delaware-registered Viceroy said Vedanta Resources is a financial zombie being kept alive by transfusions of cash from Vedanta. “The short thesis is not death by a thousand cuts: Any one of the multitude of risks we outline is sufficient to topple Vedanta’s already fragile, Ponzi-like structure.”