Vedanta to pay out Rs 7,250 cr on second interim dividend at Rs 19.5/share

So far, the company's dividend payout in FY23 stands at Rs 18,960 crore, ahead of FY22 total dividend of Rs 16,740 crore

Metals and mining major Vedanta announced a second interim dividend of Rs 19.5 per equity share on Tuesday, taking its total payout in two rounds of dividends announced so far in FY23 to Rs 18,960 crore. This is ahead of its total dividend paid in FY22, which stood at Rs 16,740 crore, data compiled by BS Research Bureau shows.

Vedanta's move comes close on the heels of the announcement by its subsidiary, Hindustan Zinc, last week of an interim dividend of Rs 21 per share. Hindustan Zinc had said that its dividend payout would entail an outflow of Rs 8,873 crore. Vedanta has a 64.9 per cent stake in Hindustan Zinc, while the Government of India holds 29.5 per cent in the company.

The current round of dividend payout by Vedanta, on the other hand, would entail an of outflow of Rs 7,250 crore, it informed the stock exchange on Tuesday. In April, the company had announced its first interim dividend at Rs 31 per share, resulting in an outflow of Rs 11,710 crore.

The dividend announcements by Vedanta come at a time when Vedanta Resources, which owns 69.7 per cent of Vedanta, has been looking to deleverage its balance sheet.

Ratings agency Moody's had said in a recent report that the holding company (Vedanta Resources) had set a target of $4 billion (Rs 32,000 crore based on the current exchange rate) by way of deleveraging in the next three years.

In April, Vedanta had announced an interim dividend of Rs 31.5 per share, with an outflow of Rs 11,710 crore (or $1.56 billion), Moody's said. Of this, Rs 8,162 crore (or $1.08 billion) was received by its holding company Vedanta Resources.

"The large cash dividend is credit positive for Vedanta Resources because it staves off some of the liquidity and refinancing risk tied to the holding company's debt maturities in the first half of FY23,” Moody’s said.

Vedanta was the top dividend-paying firm in FY22, followed by companies such as TCS, ONGC, HCL Technologies, Indian Oil Corporation, Hindustan Unilever, Hindustan Zinc, ITC, SBI and Reliance Industries among others in the top 20 list.

Cumulatively, the top 20's dividend outgo in FY22 stood at Rs 1.66 trillion, translating into a dividend payout ratio of 37.18 per cent, higher than FY21 when the dividend payout ratio was 35.55 per cent.

FY23 could mirror the trend seen in FY22, analysts and corporate governance experts had told Business Standard, as some companies grappled with a lack of good investable opportunities, forcing them to redistribute their profits as dividends. Still others were looking to continue rewarding their shareholders such as the government, who were majority stakeholders in their companies. While some other players were looking to help their parent firms deleverage their balance sheets.

Shares of Vedanta ended trade on Tuesday at Rs 238.60 apiece on the BSE, marginally up over the previous day's close at 0.51 per cent. Subsidiary Hindustan Zinc, on other hand, closed trade up 1.72 per cent over the previous day's close, at Rs 298.60 apiece.