Vedanta Announces Interim Dividend Despite Ratings Cut
The company will pay its shareholders Rs 11 per share as interim dividend, amounting to Rs 4,089 crore.
Vedanta Ltd. has announced an interim dividend even as rating agencies have recently downgraded the metals major and changed outlook amid debt concerns.
The company will pay its shareholders Rs 11 per share as interim dividend, amounting to Rs 4,089 crore. The record date for determining eligibility for dividend receipt is set for Dec. 27.
Earlier in May, the company announced it's first interim dividend for FY24. Dividends of Rs 18.50 per share were distributed, which summed up to Rs 6,877 crore.
The latest in the series of dividend payouts underscores debt worries about the company's promoter group. Of the $10.46 billion of Vedanta's debt, held by parent and subsidiaries, $5.75 billion is set to mature in 2024 and 2025, according to Bloomberg data. The company currently holds cash reserves of about $1.98 billion.
The promoter group, which holds 63.71% of the listed entity, is set to receive Rs 2,605.1 crore from the second interim dividend for FY24. Life Insurance Corp. of India, with its 9.02% stake, will receive Rs 368.80 crore.
Domestic investors who hold shares worth Rs 2 lakh will be receiving around Rs 550 crore.
The interim dividend comes amid concerns about the company's finances. Last week, S&P Global Ratings cut parent Vedanta Resources Ltd.'s rating to "CC". This came after a downgrade of the company's long-term issuer rating from "B-" to "CCC" in September. The rating agency had also shifted its outlook to "negative" in August.
Moody's also lowered Vedanta Resources' corporate family rating from "Caa1" to "Caa2" in September, due to upcoming bond maturities and a perceived lack of progress in refinancing.
Crisil revised Vedanta Ltd.'s long-term credit rating from "AA" to "AA-" in November, citing the impact of significant dividend payouts in FY23, reducing the company's cash reserves.
Vedanta has been paying higher dividends since fiscal 2017, approximately Rs 19.3 per share annually on average, but moderated payments during the pandemic. Since then, dividend payments have picked up considerably from Rs 3.9 apiece in FY20 to Rs 101.5 per share declared in FY23— the highest ever for the company.
The company's dividend payout ratio for FY23 stood at over 300%, implying that for every Rs 100 earned, Rs 358 worth of dividends were distributed during the fiscal.
