Vedanta shares jump 3% on 2050% dividend payout declaration

Vedanta aims to conclude steel asset sale by March 2024: Anil Agarwal

Key Points of Vedanta Shares Dividend Payout Declaration:

  • Vedanta Ltd, led by Anil Agarwal, saw a nearly 3% surge in its shares on Wednesday after announcing an interim dividend of ₹20.50 per share for the financial year 2022-23.
  • The total payout of the dividend is estimated at ₹7,621 crore, and the record date for payment is Friday, April 7, 2023.
  • However, the joy of the dividend payout was overshadowed by the resignation of Vedanta’s acting CFO, Ajay Goel, amidst the company’s rising debt concerns.
  • CRISIL downgraded Vedanta’s outlook on non-convertible debentures and long-term bank facilities from ‘stable’ to ‘negative’ due to the increased cash outflow from Vedanta towards large maturing debt obligations at its parent company, Vedanta Resources Ltd (VRL).
  • The downgrade reflects the possibility of higher-than-expected financial leverage, lower financial flexibility, and decreasing cash surplus to one-year maturities for FY23 and FY24.
  • Vedanta Resources, based in London, owns approximately 70% of the Mumbai-listed unit, which mines and exports commodities like aluminum, iron ore, and zinc.
  • Vedanta Resources is relying heavily on dividends from its units to cut a net debt of $7.7 billion after the Indian government opposed its plan to sell a zinc manufacturing unit to Hindustan Zinc for $3 billion.
  • Bloomberg calculations show that the total payouts for Vedanta for the year, including earlier dividends, will be about ₹37,700 crore, with Hindustan Zinc announcing a fourth dividend of approximately ₹11,000 crore last week.

Details of Vedanta Shares Dividend Payout Declaration:

Vedanta, led by billionaire Anil Agarwal, saw a surge in their shares by almost 3% in Wednesday’s trade after announcing the payout of an interim dividend for the financial year 2022-23 ending Friday. The company’s exchange filing on Tuesday stated that it will distribute ₹20.50 per share or 2050% on the face value of ₹1 per share, totaling ₹7,621 crore.

The dividend payment’s record date is on Friday, April 7, 2023, as per the statement. However, the joy of the dividend payout was overshadowed by the resignation of Vedanta’s acting chief financial officer, Ajay Goel, amidst the company’s increasing debt concerns.

CRISIL, a global rating agency, downgraded Vedanta’s outlook on non-convertible debentures and long-term bank facilities from ‘stable’ to ‘negative’ following the announcement. The downgrade in outlook reflects the possibility of higher-than-expected financial leverage, lower financial flexibility, and a decreasing cash surplus to one-year maturities for FY23 and FY24. CRISIL attributed this change to Vedanta’s increased cash outflow in the form of dividends towards large maturing debt obligations at its parent company, Vedanta Resources Ltd (VRL).

Vedanta Resources is relying heavily on dividends from its units to cut a net debt of $7.7 billion since its plan to sell a zinc manufacturing unit to Hindustan Zinc for $3 billion was opposed by the Indian government. The government, which owns around 30% of Hindustan Zinc, has threatened to take legal action to stop the sale, citing concerns such as high valuations and it being a related-party transaction.

Bloomberg calculations reveal that the total payouts for Vedanta for the year, including previous dividends, will be about ₹37,700 crore. Last week, Vedanta’s unit Hindustan Zinc announced a fourth dividend of approximately ₹11,000 crore. Vedanta Resources, based in London, holds roughly 70% of the Mumbai-listed unit, which mines and exports commodities like aluminum, iron ore, and zinc.

On the NSE, Vedanta’s shares traded at ₹282 apiece on Wednesday, up 2.83%. The company has promised to announce a successor to Ajay Goel soon.

About Vedanta:

Headquartered in Mumbai, India, Vedanta Ltd is a leading multinational mining company with major operations in the mining of iron ore, gold, and aluminium. The company’s mining activities are primarily centered in the states of Goa, Karnataka, Rajasthan, and Odisha. Vedanta Limited is recognized globally for its commitment to sustainable development and responsible mining practices.

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