Vedanta declares first interim dividend for FY24 at Rs 18 per share

Vedanta on Monday announced its first interim dividend for Financial Year 2023-24 at Rs 18 per share. "The Board of Directors of the Company through a resolution passed by circulation on Monday, May 22, 2023 have approved First Interim Dividend of Rs 18.50 per equity share i.e. 1850% on face value of Re 1/- per share for the Financial Year 2023-24 amounting to ₹6,877 crores," the company said in an exchange filing.

The record date for the purpose of payment of dividends is Tuesday, May 30, 2023. The interim dividend will be paid within stipulated timelines as prescribed under law, the company said.

In FY23, the company declared a total dividend of Rs 101.50 per share. Its cash and cash equivalents stood at Rs 20,922 crore at the end of the financial year. Vedanta's FY23 dividend payout helped reduce debt at parent Vedanta Resources, said Systematix Institutional Equities ahead of the announcement of interim dividend.

Systematix said the dividend was 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 to pay high dividends in FY24E and FY25E, Nuvama Institutional Equities said. This brokerage has factored in dividends per share of Rs 45 each for FY24E and FY25E. Nuvama said 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.

However, Kotak Institutional Equities said that higher dividends were unsustainable for the company. 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 in 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.