Vedanta shares jump on Rs 6,877 crore dividend announcement. Record date, history & more

Shares of Vedanta jumped 2 per cent in Tuesday's trade after the Anil Agarwal company announced an interim dividend of Rs 18.50 per share fo FY24, amounting to Rs 6,877 crore. Analysts largely estimate dividend for FY24 to be in Rs 45-80 per share range, citing parent Vedanta Resources' debt obligations. 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.

Vedanta said the record date for the purpose of payment of dividend is May 30 and that the interim dividend will be paid within stipulated timelines as prescribed under law.

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's FY23 dividend payout helped reduce debt at parent Vedanta Resources, said Systematix Institutional Equities, which said dividend is likely to remain elevated at Rs 60-80 per share over FY24 and FY25 driven by a sharp reduction in energy costs, especially for coal, implying a yield of 22-29 per cent providing strong downside support.

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.

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