Vedanta Stock Price: Shares of Vedanta gained 2 percent in Tuesday’s trading after the company’s board of directors approved its first interim dividend for fiscal year 2023-2024 of Rs 18.50 per share, amounting to Rs 6,877 crore.
Vedanta First Interim Dividend 2024
The dividend, which amounts to Rs 6,877 crore, will be 1,850 per cent of the par value of each share of Rs 1. The record date for determining the entitlement of shareholders to shares is set for May 30.
The interim dividend will be paid within the timeframes prescribed by law, the company said in its statement.
Vedanta shares will trade ex-dividend on or before the record date.
The company had announced a dividend of Rs 33 per share in the March quarter and a total dividend of Rs 101.50 for FY23, equating to Rs 37,730 crore.
Data available from AceEquity showed that Vedanta paid Rs 45 dividends per share in FY22, amounting to Rs 16,689 crore. It announced Rs 3,519 crore (Rs 9.50 per share) in dividends in FY21 and Rs 1,444 crore (Rs 3.90 per share) dividend payout in FY20. The company has been a regular dividend payer, at least since 1994, AceEquity suggests. Between FY17 and FY19, the company announced Rs 7,000-8,000 crore in dividends.
For FY24, Vedanta has not provided guidance on dividend payment, according to Motilal Oswal Securities. It noted that the company’s net debt stood at Rs 44,500 crore, up 115 percent year-on-year due to dividend payment and higher capex. This brokerage has a target of Rs 280 on the Vedanta shares.
Vedanta may continue to pay high dividends in FY24E and FY25E, according to Nuvama Institutional Equities. This brokerage reckons dividends per share of Rs 45 each for FY24E and FY25E. Vedanta is awaiting final approval from lenders to transfer Rs 12,590 crore from general reserve to retained earnings which will help in dividend payment, it noted.
However, Kotak Institutional Equities called higher dividends unsustainable. It said an increase in net debt was driven by high dividends (Rs 101.50 per share) paid out in FY2023 and estimated standalone net debt/Ebitda rose to 4.2 times in FY2023.
“Such high dividends are unsustainable. Capex of Rs 20,000 crore in FY2024E suggests that negative free cash flow and dividends would increase debt proportionally. Parent company VRL sold a 1.6 percent stake in the market in March 2023 to partially fund its repayment requirements. VRL has $2.1 billion in principal payments remaining in FY2024E and $3 billion is due in FY2025E. We note that parent leverage concerns are likely to remain an overhang and drive Vedanta’s capital structure in the medium term,” the company said.
Meanwhile, Vedanta Resources’ Ltd (VRL), the UK-based parent company of Vedanta Ltd, is reportedly in talks with Deutsche Bank and other global lenders, including JPMorgan and Barclays, to secure a $500-600 million loan on after delays in securing funds from Farallon Capital Management to meet its obligations later this month. The company wants to borrow the money through its Zinc International unit.
A $500 million repayment is due on a 7.125 percent bond due May 31.
Vedanta Financials
Vedanta reported a 68 percent drop in Q4FY23 net profit, weighed down by a “one-time charge” in its oil and gas business. The company’s profit in the three months ended March fell to Rs 1,881 crore from Rs 5,799 crore a year earlier.
The company’s net debt was about Rs 44,500 crore, up 115 percent year-on-year due to dividend payment and higher capex. The cash and cash equivalents amounted to approximately Rs 21,800 crore.