Vedanta Share Price: Shares of Vedanta gained 2 per cent in Tuesday’s Trade after the company’s board approved the first interim dividend for the financial year 2023-2024 of Rs 18.50 per share, amounting to Rs 6,877 crore.
Vedanta First Interim Dividend 2024
The dividend, which totals Rs 6,877 crore, will be 1850 per cent of the face value of each share of Rs 1. The record date for determining the equity stockholders’ entitlement has been set as May 30.
The interim dividend will be paid within the stipulated timelines as prescribed under the law, said the company in its statement.
Vedanta stock will begin trading 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, amounting to Rs 37,730 crore.
Data available with AceEquity showed Vedanta paid Rs 45 per share dividend 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 7,000-8000 crore worth dividends.
For FY24, Vedanta did not provide any guidance on dividend payment, said Motilal Oswal Securities. It noted that the company’s net debt stood at Rs 44,500 crore, up 115 per cent YoY due to dividend payout and higher capex. This brokerage has a target of Rs 280 on the Vedanta stock.
Vedanta may continue pay high dividend in FY24E and FY25E, said Nuvama Institutional Equities. This brokerage has factored in dividend per share of Rs 45 each for FY24E and FY25E. Vedanta is awaiting final approval from lenders to shift Rs 12,590 crore from general reserve to retained earnings, which will help in dividend payment, it noted.
Kotak Institutional Equities, however, said higher dividends a unsustainable. It said that an increase in net debt has been led by high dividends (Rs 101.50 per share) paid out in FY2023 and estimated standalone net debt/Ebitda increasing to 4.2 times in FY2023.
“Such high dividends are unsustainable. Capex of Rs 20,000 crore in FY2024E suggests negative FCF and dividends would increase debt proportionately. Parent VRL has sold 1.6 per cent stake in the market to partly fund its repayment requirements in March 2023. VRL has $2.1 billion repayments left in FY2024E and $3 billion is due in FY2025E. We note the concerns around parent leverage is likely to remain an overhang and drive Vedanta capital structure in the medium term,” it said.
Meanwhile, Vedanta Resources’ Ltd (VRL), the UK-based parent of Vedanta Ltd, is reportedly in talks with Deutsche Bank and other global lenders, including JPMorgan and Barclays, to raise a $500-600 million loan after delays in securing funds from Farallon Capital Management to meet its obligations later this month. The company aims to borrow the money via its Zinc International unit.
A $500-million repayment is due on a 7. 125 per cent bond that matures on May 31.
Vedanta posted a 68 per cent 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 declined to Rs 1,881 crore from Rs 5,799 crore a year earlier.
The company’s net debt stood around Rs 44,500 crore, up 115 per cent YoY due to dividend payout and higher capex. Its cash and cash equivalent stood at around Rs 21,800 crore.