Vedanta Viceroy Controversy: Why JP Morgan, Bank of America are Still Bullish on the Metal giant

In recent weeks, a controversy has gained global attention, with Vedanta Ltd. (NSE: VEDL) falsely involved in foreign entities’ short-sellers’ strategies. An 87-page report was released by Viceroy Research, an American short-seller firm, targeting Vedanta Resources Ltd. (VRL), the parent company of India listed Vedanta Limited, questioning its corporate governance. But amidst all this, Vedanta has got support from global firms like JP Morgan and Bank of America who continue to believe in the company’s robust operations. Despite all the baseless allegations made against Vedanta, the global research firms still rate Vedanta’s stocks as “Overweight”.

JP Morgan also stated that it remains comfortable with Vedanta’s leverage position and the government’s oversight of Hindustan Zinc Ltd. (HZL), an arm of Vedanta Ltd.

JP Morgan Remains Least Affected by These Distractions 

JP Morgan remains least affected by third-party concerns regarding financial management and governance practices at Vedanta Resources and its subsidiary, Vedanta Ltd.  The firm rather stated that it remains overweight on Vedanta Ltd. and sees no major credit red flags.

“We have generally focused on Vedanta Ltd.’s cash flows and earnings, excluding Hindustan Zinc, to unravel the key drivers of the credit. We are unable to see any financial stress at VDL with these figures. For HZL, net leverage was 0.1x. HZL has capex plans and we see net leverage going up to 0.5x,” 

JP Morgan’s Contrarian View to Viceroy

Amid the tough time, JP Morgan did not give up on Vedanta and continued its support due to fundamental reasons, with a strong commodity price environment being the most prominent. Vedanta’s diversified operations in key areas, including aluminium, zinc, silver, oil, and other resources, bring resilience to the prices. Vedanta’s cash flow remains firm despite baseless controversies.

Also, contrary to Viceroy’s allegations, JP Morgan highlighted significant improvements in Vedanta’s balance sheet, driven by internal cash generation instead of borrowings from outside. Vedanta’s FY2024-25 stands out as a year of strong performance, with the highest-ever revenues of INR 1,50,725 crores and EBITDA of INR 43,541 crores, up 19% YoY, reflecting Vedanta’s strong balance sheet. The Net Debt to EBITDA has also improved to 1.2x which is in-line with global peers.

Debt-related allegations stand null and void in the case of a company like Vedanta that has made contributions worth INR 55,349 crore to the Indian government (through direct and indirect taxes) in fiscal year 2024-2025.

Support from Other Institutions

Besides JP Morgan, other leading firms also extended their support to Vedanta in this reputational crisis. BofA Securities (Bank of America) also maintained a positive recommendation on securities issued by Vedanta, due to its strong financial records. These pillars form the foundation of a trusted and empowered environment with continuous success and growth for Vedanta will ensure a positive legacy for future generations. Also, strategic restructuring with a scheduled Vedanta demerger and focus on ethical operations has effectively allowed Vedanta to move beyond baseless challenges linked with the recent Viceroy controversy.

Final Words

The Vedanta-Viceroy controversy is a reminder of how foreign short-sellers can disrupt market sentiment, especially in emerging economies like India. But at the same time, it also reveals how institutional investors, whose studies are research-based, stand as a pillar in tough times. 

Indeed, JP Morgan’s support in Vedanta sends a strong message- the Indian market can’t be derailed by a few foreign entities, especially when fundamentals are intact.