Vedanta Declares High Dividend Payout Along With Q4 Earnings; Should You Buy Shares?

Vedanta Ltd, while announcing its March quarter results, said that it will pay Rs 11,710 crore as dividend to shareholders in line with its robust performance on profitability and cash flows. This will also help the Vedanta group in deleveraging, in line with the latest capital allocation policy, the company said Thursday.

Vedanta has a consistent track record of rewarding its shareholders with strong dividend payout. Last year we paid Rs 45 per share amounting to Rs 16,728 crore which translates into a 14 per cent dividend yield one of the highest among peers in FY22 and had a record total shareholder’s return. This (interim dividend announced today) is in line with our robust performance on profitability and cash flows. This will also help the Vedanta group in deleveraging, in line with latest capital allocation policy,” said the company in its statement.

Vedanta’s board has approved a Rs 31.50 per share interim dividend, which triggered a rally in the bonds of its parent Vedanta Resources Ltd which will use the income to pay down debt. That will provide some relief to its parent which faces a wall of maturities, beginning with a $1 billion note due in July.

Meanwhile, group net income dropped nearly 10 per cent from a year earlier to Rs 5,800 crore in the January-to-March period. That would be the first year-on-year decline in profit since the quarter ended in September 2020. It also missed analysts’ estimates.

Industries across the world have been grappling with higher energy and commodity costs that have been exacerbated by Russia’s war in Ukraine as supply chains get upended. Locally, Indian mills are finding it difficult to secure thermal coal supplies, especially aluminum producers, as the government diverts the fuel to the power sector.

The share price of Vedanta Ltd. gained 1.48 per cent to Rs 417.75 at 10:20 AM (IST) in Friday’s trade. The counter has hit a high of Rs 419.55 and a low of Rs 406.35 so far during the session. The stock had closed at Rs 411.65 in the previous session. The counter has had a total traded volume of 379202 shares so far with a value of Rs 15.64 crore on the NSE. It traded at a price-to-earnings multiple of 8.27 and a price-to-book ratio of 1.37.

Vedanta Shares: What do Brokerages Say?

The brokerage firm, JPMorgan, maintained an overweight rating on Vedanta but raised the target price to Rs 490 from Rs 465 earlier which translates into an upside of over 22 per cent from Rs 399 recorded on 30 March.

The brokerage firm, Motilal Oswal, said that “Vedanta reported yet another quarter of record-high revenue and EBITDA. Consolidated revenue grew 41per cent YoY and 17 per cent QoQ to INR 398b in 4QFY22. Consolidated EBITDA stood at a record high of INR 136b, up 50 per cent YoY and 26 per cent QoQ. Attributable PAT rose 90 per cent YoY and 6 per cent QoQ to INR62b in 4QFY22, even though PBT at INR102b was in line. Revenue/EBITDA/PAT was 11.5 per cent/5.5 per cent/6.5 per cent higher than our estimate.”

“Though the company has declared a strong result with a positive outlook, and given its hedging policy and control over coal cost, we feel the current valuation captures a large part of the performance at near peak metal prices. We marginally raise our TP to INR470 per share (from INR462 earlier) incorporating higher LME prices,” Motilal Oswal further added.

Disclaimer:Disclaimer: The views and investment tips by experts in this report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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