Vedanta declares dividend ahead of debt repayment
NEW DELHI: Amid debt obligations, Anil Agarwal-owned Vedanta Ltd on Monday declared its second interim dividend of FY23-24 worth Rs 11 per share. The record date for the payment of dividends is December 27, 2023, and the amount spent on this exercise stands at Rs 4,089 crore.
As Vedanta’s parent company Vedanta Resources (VRL) holds a 63.71% stake in the listed firm, VRL will be the biggest beneficiary of this payout.
The London-headquartered company is likely to receive dividend payout of little over Rs 2,600 crore. The mining giants’ decision to announce a second dividend comes at a time when the street, financial institutions, and credit rating agencies are watching the company’s debt repayment deadline.
The highly leveraged company has to repay as much as much as $1 billion in January 2024.
Anirudh Garg, Partner and fund manager at INVAsset, said this timely dividend decision precedes a $1 billion debt repayment due in January 2024.
“Beyond dividends, Vedanta excels in debt reduction, having prepaid all debts until March 2023 and achieved half of its $4 billion three-year debt reduction target within the first year. This debt management, including a substantial $2 billion deleveraging in the past year, underscores their dedication to financial health,” added Garg.
Earlier this year, Vedanta had approved its first dividend of Rs 18.5 per share, amounting to a payout of Rs 6,877 crore. In FY2023, the company gave five dividends.
The fresh dividend announcement comes days after subsidiary firm Hindustan Zinc declared a dividend of Rs 6 per share. This is the fourth in the calendar year 2023 Hindustan Zinc started trading ex-dividend.
Besides the dividend route, Vedanta’s parent company (VRL) had last week announced signing a refinancing facility worth $1.25 billion along with a new credit facility.
While the company didn’t announce the names of lenders, it said the fundraising will create “a long-term sustainable capital structure for the company.”