Vedanta shareholders eye bonanza, board to consider interim dividend after failed delisting

Anil Agarwal-led Vedanta Ltd today informed the bourses that the company’s board will meet later this week to consider and approve the first interim dividend on equity shares for the current fiscal year. The move comes days after its subsidiary Hindustan Zinc announced an interim dividend of Rs 21.30 per equity share. According to the latest shareholding data available on the Bombay Stock Exchange’s website, Vedanta holds 274 crore shares of the Hindustan Zinc, translating to an interim dividend of Rs 5,842.9 crore. According to analysts, Vedanta could also distribute the dividend it received from Hindustan Zinc in May this year.

With the business environment improving, expectations of a higher dividend payout can not be ruled out. “As per the policy Vedanta Ltd was supposed to distribute the previous dividend as well, but due to a volatile environment they did not. Performance of the company has now improved and the macro-environment is also better, helped by the Chinese demand going up,” Abhimanyu Sofat, Vice President-Research, IIFL told Financial Express Online.

Taking into consideration the recent dividend from Hindustan Zinc, Vedanta could have a total of over Rs 10,000 crore to be distributed among shareholders. “It seems that right now nothing will happen on the delisting front, so the possibility of the dividend payout being significantly high is there,” Sofat added.

Vedanta’s board will meet on October 24 to consider the dividend and the record date for the same has been set as October 31. “I think the street is factoring in a higher payout. Dividend was on hold because of the delisting issue with that on hold now it could work out to be somewhere in the range of Rs 20-25 per share,” said Aniruddha Sarkar, Chief Investment Officer & Portfolio Manager, Quest Investment Advisors. He further believes that a higher dividend could also help Vedanta calm down the agitated investors who were visibly upset with the delisting offer. “This (dividend) could act as a sweetener that may help Vedanta come with a revised delisting offer after 6 months or more,” he added.

A higher dividend payout would also help the promoter entity, Vedanta Resources. Rating agency S&P Global earlier this week said that the failed delisting of Vedanta Ltd raises risks over Vedanta Resources’ ability to sustainably service its debt beyond the next 12 months.  “Vedanta Resources faces debt maturities of about US$1.8 billion over the next year. These include a US$414 million loan due in December and a US$670 million bond due in June 2021,” S&P Global said.

Earlier this month, Vedanta’s delisting failed as public shareholders did not tender the required 134 crore shares that were needed for the firm to go off the stock exchanges. Vedanta has set the floor price for the delisting of shares at Rs 87.25 per share but majority of the stocks tendered during the delisting process by public shareholders were in the range of Rs 140-150 per share.

Analysts have been claiming that the correction in Vedanta’s stock price post the failed delisting has made the stock an attractive bet. “I find Vedanta, except for the issues with promoters, is a good business with good assets. As a stock it could be interesting to hold as upside could be significant post the correction,” said Abhimanyu Sofat. On the other hand Aniruddha Sarkar said that the management continues to remain an overhang for him for which he would avoid the stock.