Vedanta shares gain 3% after announcement of 2050% dividend payout
Shares of billionaire Anil Agarwal-led Vedanta Ltd rose nearly 3 percent in Wednesday’s trade after the company said it will hand out a fifth dividend for the financial year 2022-23 ending Friday.
The company will pay an interim dividend of ₹20.50 per share, or 2050 per cent on face value of ₹1 per share, amounting to ₹7,621 crore, according to an exchange filing Tuesday. “The record date for the purpose of payment of the dividend is Friday, April 07, 2023,” the statement read.
Following the announcement, CRISIL joined the club of global rating agencies by downgrading the outlook on Vedanta’s non-convertible debentures and long-term bank facilities to ‘negative’ from ‘stable’.
The change in outlook reflects the possibility of higher-than-expected financial leverage and lower financial flexibility with reducing ratio of cash surplus to one-year maturities for FY23 and FY24, it said.
“This is due to increased cash outflow from Vedanta, in the form of dividends, towards large maturing debt obligations at its parent company Vedanta Resources Ltd (VRL).” CRISIL stated.
The dividend payout news was also offset by the resignation of Vedanta’s acting chief financial officer Ajay Goel, effective from 9 April, as it has come at a time when questions are being raised on the group’s rising debt.
The company said that a successor will be announced in due course.
Vedanta Resources is relying heavily on dividends from its units to help cut a net debt of $7.7 billion as its plan to raise $3 billion by selling a zinc manufacturing unit to Hindustan Zinc ha been vehemently opposed by the Indian government.
The government, which owns about 30 per cent of Hindustan Zinc, has threatened to take legal action to stop the sale on concerns ranging from high valuations to it being a related-party transaction.
Total payouts by Vedanta for the year, including earlier dividends, will be about ₹37,700 crore, according to Bloomberg calculations. Vedanta’s unit Hindustan Zinc announced a fourth dividend of about ₹11,000 crore last week.
London-based Vedanta Resources owns about 70 per cent of the Mumbai-listed unit that mines and exports commodities such as zinc, iron ore and aluminum.
On Wednesday, Vedanta shares were trading 2.83 per cent higher at ₹282 apiece on the NSE.
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