Vedanta board to consider interim dividend on December 18, fixes record date

Earlier in May, Vedanta had declared its first interim dividend of ₹18.50 per share.

“In January there was a big bullet payment. This is a positive news. They have recently given a dividend of ₹6 from Hindustan Zinc, and that translates to roughly about ₹1,600 crore for Vedanta. So, if they upload it, they can give a little over ₹4 dividend only from the Hindustan Zinc dividend. The overall dividend would be higher than ₹4 to bridge some gap in the financing, which is pending. So, $200-300 million probably they would be wanting and that would be uploaded through a dividend. The current payout would be about ₹6-7, expected dividend that should be announced on December 18,” said Vikash Singh, VP-Metals & Mining at PhillipCapital.

Singh added, "We are still positive. The last time we spoke, we were probably the only person in the state who were positive on the stock. We continue our positive stance because base metals prices have bottomed out and we can expect some rally on base metals also."

Kotak, in a note earlier, highlighted that large dividends by Vedanta Resources Ltd (VRL) are no longer possible and the company might be forced to further divest stake or assets in Vedanta Ltd.

"Hefty dividends by VEDL/Hindustan Zinc in FY2022-23 shifted VRL's debt to VEDL. Entire surplus cash of HZ has been given out as dividends. VEDL’s net debt/EBITDA has increased to 4.7 times in FY2024E (2 times FY2022). High leverage and negative FCF (free cash free) due to growth capex suggest that large dividends are largely behind at VEDL," Kotak said.

The dividend outgo by Vedanta has jumped in the last few years. In FY23, the mining major had paid a total dividend of ₹37,572 crore. Vedanta declared ₹16,689 crore in divided in FY22 and ₹3,519 crore in FY21.

Recently, Hindustan Zinc, in which Vedanta has a majority stake, announced a second interim dividend of ₹6 per share. The record date for the second interim dividend, has been fixed as December 14, 2023.

The total consideration for the payout of the above mentioned dividend comes up to ₹2,535.19 crore.

A record date means shareholders who own shares of the company at that particular date will be eligible for the dividend payout.

This is the lowest dividend payout issued by Hindustan Zinc since 2018. Earlier, Hindustan Zinc had announced its first interim dividend of ₹7 per share in July. For the financial year 2023, the company declared a total dividend of ₹75.5 for the full year.

According to a CNBC-TV18's report, the final dividend announcement in March had drained the company of all its cash.

According to the September 2023 quarter shareholding pattern, Vedanta holds a 64.92% stake in Hindustan Zinc, most of which is pledged. Based on the stake, Vedanta will receive a total payout of ₹1,645 crore.