1:6 Split, Rs 8,500 Cr Fundraise: Metal Stock Vedanta's Rs 11/Sh Dividend Record; BUY, Rs 622/TP By Nuvama

Ahead of a massive dividend payout of Rs 11 per share as interim for FY25, brokerage Nuvama increased its target price of Rs 540 to Rs 622 0n metal stock giant Vedanta. The billionaire Anil Agarwal-backed company is set to turn ex-dividend on May 24.

The company declared its first interim dividend of Rs 11 per share having a face value of Rs 1 each for FY25. The dividend payout is to the tune of Rs 4,089 crore.

The record date for payment of the dividend shall be Saturday, May 25, 2024, and the interim dividend shall be duly paid within the stipulated timelines as prescribed under law. But since the market is closed on weekends, the record date eventually falls on May 24.

Before turning ex-dividend, Vedanta share price stock ended at Rs 472.40 apiece, down by 3% with a market cap of Rs 1,75,600.37 crore. 2024 so far has been fruitful for Vedanta shares as it earlier this month touched a new 52-week high of Rs 506.85 apiece, before correcting.

Currently, Vedanta shares are up by 127% from its 52-week low of Rs 207.85 apiece. Also, year-to-date, the stock is up by 84% on BSE.

After Vedanta crossed Rs 500 levels, brokerage Nuvama increased its target price to Rs 622 per share while maintaining BUY on Vedanta. The brokerage expects another Rs 29 dividend per share in the remainder of FY25, while it estimates EBITDA in Q1 to rise between 25-30% sequentially. Additionally, the key positive for buying Vedanta is also its debt which peaked in FY24, while the company is on the verge of receiving approval from shareholders for a vertical demerger.

Apart from this, Vedanta has also announced fundraising by issue of equity shares and/or any financial instrument(s) and/or security convertible into equity shares, a combination of such securities by way of one or more public and/or private offering(s) and/or further public offering and/or qualified institutions placement(s) and/or preferential allotment(s) and/or rights offering or American depository receipts / global depository receipts and/or foreign currency convertible bonds or any combination thereof or any other method under applicable laws, for an aggregate consideration of up to Rs 8,500 crore.

Vedanta is on the move to split into a 1:6 ratio by December 2024-end via demerger of its six businesses which are under its ambit. Last year, in September, Vedanta announced the creation of a demerger of 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.

In Q4FY24, the company posted consolidated revenue of Rs 34,937 crore, flat sequentially, while its EBITDA rose by 3% QoQ to Rs 8,969 crore with an EBITDA margin of around 30%. PAT excluding exceptional items in Q4FY24, came in at Rs 2,453 crore. Further, Vedanta recorded a decline of 10% in its net debt to Rs 56,338 crore. While it said, "Deleveraging of Rs 6,155 crore QoQ, significantly improved Net Debt/EBITDA to 1.5x from 1.7x.