1100% Dividend, 39% Yield: Why Metals And Mining Player Vedanta's Share Price Will Be In Focus This Week?

Billionaire Anil Agarwal-backed Vedanta stock price will be in focus this week. That is because the metal giant which is also among the dividend king stocks will be turning ex-dividend on December 27th for its second interim dividend payout for FY24.

Last week, on Friday, Vedanta's share price ended at Rs 259.75 apiece, up by 1.5% on BSE with a market cap of Rs 96,554.18 crore.

In the trading week from December 18th to 22nd, Vedanta share's weekly performance was broadly flat. However, in a one-month span, the stock has zoomed by 11%. Nevertheless, Vedanta shares have declined nearly 18% year-to-date, due to concerns related to its parent Vedanta Resources debt obligations.

It will be keenly watched if the dividend record date will drive Vedanta's market cap to over Rs 1 lakh crore.

The latest dividend that Vedanta has announced is the second interim amounting to Rs 11 per share for FY24. In percentage terms, this dividend payout will be a whopping 1100%. In value terms, Vedanta will pay a massive Rs 4,089 crore to its shareholders. The face value of these dividends is Re 1 per share.

For the second interim dividend, Vedanta will turn ex-dividend on December 27th which is also the record date to determine eligible shareholders for the benefit.

This means only those investors will be eligible to receive Vedanta's second interim dividend who hold the company's shares by the end of December 27th.

Vedanta has a long history of paying hefty dividends. Since July 2001, as per Trendlyne data, the company delivered a massive 41 dividends. In 2023 so far, Vedanta delivered dividends up to 6,250% amounting to Rs 62.5 per share. Some of these dividend payouts were for the previous fiscal. That being said, Vedanta paid a total mind-boggling 10150% dividend in FY23 to the tune of Rs 101.5 per share.

Currently, Vedanta's dividend yield is at 39.08%, making it the largest dividend yield stock on the Indian market.

Notably, Vedanta has been paying dividends despite net loss in Q2FY24. During the second quarter of FY24, the metals and mining player reported a consolidated net loss of Rs 915 crore as against a net profit of Rs 2,690 crore in the same quarter a year ago. The losses in Q2FY24 could be attributed to net loss in one-time exceptional items owing to the adoption of the new tax rate. Meanwhile, its revenue from operations stood at Rs 38,546 crore, recording single-digit growth of 6.37% as against Rs 36,237 crore in Q2 of FY23.

Vedanta Resources which is the parent company of Vedanta has been a spoilsport over the company's growth. Earlier in December, S&P Global Rating downgraded the long-term issuer credit rating on VRL and its long-term issue ratings on the company's bonds due January 2024, August 2024, and March 2025 to 'CC' from 'CCC'.

Also, S&P revised the CreditWatch implications on the 'CCC' issue rating on Vedanta Resources' bond due April 2026 (which is not part of the proposed transaction) to develop from negative. This reflects the likelihood that the rating on this bond could move in either direction, depending on the outcome of the transaction on the other bonds.

According to S&P, "Until US$750 million of the private credit facility is repaid, it will have priority over extraordinary dividends that any asset sales at Vedanta Ltd. could generate. The group will thereafter distribute proceeds equally between the private credit facility and bondholders until it fully repays the private credit facility."

To unlock value and attract big-ticket investment into the expansion and growth of each of the businesses, Vedanta's board of directors in October month approved the demerger of business units into independent 'pure play' companies. Ultimately, Vedanta and its business will be separated into six listed companies by FY25.

However, analysts are split into mixed opinions when it comes to Vedanta's demerger plan, however, they agree on one thing the move is not enough to solve the parent company Vedanta Resources' debt problems.

Currently, Vedanta has a unique portfolio of assets among Indian and global companies with metals and minerals - zinc, silver, lead, aluminium, chromium, copper, nickel; oil and gas; a traditional ferrous vertical including iron ore and steel; and power, including coal and renewable energy; and is now foraying into manufacturing of semiconductors and display glass.