Metal giant Vedanta slipped more than 1% on BSE during the trading session of September 4, as the record date for its upcoming hefty reward nears. Meanwhile, the stock has slipped by nearly 2% in five sessions. This billionaire Anil Agarwal-backed metal player is among the top dividend-paying stocks and has the highest dividend yield in the metal segment and large-cap basket. Currently, the stock is below Rs 460, and the majority of analysts have recommended BUY.
Vedanta Share Price:
Vedanta stock ended at Rs 459.60 apiece, down by 1.07% on NSE after market hours of September 4th, 2024. The stock is down by 9.4% from its 52-week high of Rs 506.75 apiece, while the is a multi-bagger as it has more than doubled from its 52-week low of Rs 208 apiece.
YTD, Vedanta shares have surged by nearly 79% on NSE. While in less than 25 years, the stock has recorded humungous gains to the tune of 15,917.18%. The stock was merely at Rs 2.91 apiece on January 3, 2000.
Vedanta Credit Rating Upgrade:
On September 4, ICRA upgraded its long-term rating on Vedanta, while the agency continues on Rating Watch with Developing Implications.
In its rationale, ICRA said that the long-term rating upgrade considers an expected improvement in Vedanta Limited's (VDL) credit metrics, following the successful fund-raising worth ~$1 billion by the company via a qualified institutional placement (QIP) in July 2024 and an additional ~$400 million generated from the offer for sale (OFS) of Hindustan Zinc Limited (HZL) in August 2024. These funds are expected to be primarily allocated towards deleveraging, which will also lower the overall interest expenses for the entity. Further, the $500 million raised by Vedanta Resources Limited (VRL) through a stake sale in VDL in July 2024 will help reduce the Group's overall debt burden.
Consequently, ICRA added, the overall group leverage (total debt/OPBDITA) is anticipated to decline to ~2.3-2.5 times in FY2025 and FY2026, from 3.6 times reported in FY2024, substantially strengthening the entity's credit profile. The interest coverage is also expected to improve to ~3.5-4.0 times in FY2025 and FY2026 from 2.2 times in FY2024. Additionally, VRL is looking to refinance a substantial portion of its outstanding bonds to lower the consolidated entity's interest costs further. All the deleveraging efforts are expected to improve the overall financial flexibility of the Group.
Vedanta Dividend:
Vedanta has announced a third interim dividend of a whopping Rs 20 per share, having a face value of Re 1 each for FY25. This upcoming dividend payout will be worth Rs 7,821 crore.
For the third interim dividend, the record date for the purpose of payment of the dividend shall be Tuesday, September 10, 2024, and the interim dividend shall be duly paid within the stipulated timelines as prescribed under law.
Earlier, for FY25, the company paid a second interim dividend of 400% worth Rs 4 per share for which it turned ex-dividend on August 8, 2024. The first interim dividend for the fiscal was 1100% worth Rs 11 per share and Vedanta turned ex-dividend on May 24, 2024, for the same.
In FY24, Vedanta delivered up to 2,950% dividend valuing Rs 29.5 per share.
On the current market price, Vedanta has a dividend yield of 6.4%.
Vedanta Shares BUY/SELL?
As per the Trendlyne data, the consensus recommendation from 14 analysts for Vedanta Ltd. is BUY. Out of the total analysts, 8 of them have given a 'Strong BUY' call on Vedanta, while 5 of the analysts have suggested HOLD. The 1-year average target price is set at Rs 479.79 apiece, hinting at a nearly 4.5% potential upside.
At the latest, CLSA has a positive outlook on Vedanta, while it maintained 'Outperform' on the stock, for a target price of Rs 520.
According to the foreign brokerage, the latest corporate actions including a stake sale in Hindustan Zinc via offer for sale, coupled with dividends by both Vedanta and Hindustan Zinc - are likely to augur well for Vedanta's deleveraging.
Vedanta 1:6 Demerger:
Among much awaited development in Vedanta is its demerger into six businesses, aka a 1:6 ratio. Vedanta has received approval to demerger metals, power, aluminium, and oil and gas businesses to unlock potential value. After the exercise, six independent verticals - Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and Vedanta Limited - will be created.
As part of the demerger plan, for every share of Vedanta, shareholders will receive one share of each of the five newly listed companies. After the demerger, the businesses of Hindustan Zinc and the electronics business will remain with Vedanta Limited. The company is expecting to complete its demerger by December 2024 end.
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