Rs 8.5/Share Dividend Payout: Largecap Metal Stock Vedanta Slumps 2% On 4th Interim Dividend; BUY?

The shares of Vedanta Ltd opened lower on Tuesday, December 17, extending Monday's decline and trimming recent gains after the company's board approved the fourth interim dividend for FY25. The stock fell nearly 2% to Rs 504 on the National Stock Exchange (NSE), marking its second consecutive session of losses. On Monday, the stock had declined by 1.15%.

Fourth Interim Dividend Details

Billionaire Anil Agarwal-led Vedanta announced the fourth interim dividend at Rs 8.5 per share for FY25, which translates to a total payout of Rs 3,324 crore. With this, the total dividend distribution by Vedanta for the ongoing financial year has surged to Rs 16,799 crore. The record date for determining eligible shareholders has been fixed as December 24, 2024.

The UK-based parent company, Vedanta Resources Plc has been grappling with high debt obligations, and recently raised over $2 billion by reducing its stake in Vedanta Ltd. The proceeds have been used to refinance debt maturities, improve liquidity, and infuse equity into its group businesses.

Vedanta Stock Performance

Vedanta's stock price had gained 1.5% over the last five trading sessions in anticipation of dividend payouts and improved financial performance. However, investor sentiment turned cautious post-announcement, leading to profit booking. Despite the recent declines, Vedanta shares have been on a stellar run this year, doubling in value over the past 12 months. This sharp rally has significantly outperformed the benchmark NSE Nifty 50, which has gained less than 16% in the same period. Vedanta's performance has propelled its market capitalisation to over Rs 1.9 lakh crore.

Promoter Stake

Vedanta's promoters reduced their shareholding in the company from 59.32% to 56.38% during the July-September quarter as part of their broader deleveraging strategy. Meanwhile, foreign institutional investors (FIIs) and domestic mutual funds have been increasing their exposure to the stock. FIIs now hold 11.45% of Vedanta, while mutual funds have raised their stake to 7.62%.

During its September quarter earnings call, Vedanta highlighted that dividend payouts and brand fees would continue to support the parent company's financial needs. The company's strategy aims to balance shareholder returns with capital discipline while ensuring sustainability at the group level.

Dividend Record

The fourth interim dividend brings Vedanta's total payout to Rs 43.5 per share in FY25. Analysts note that Vedanta's generous dividend policy has played a key role in boosting investor confidence, particularly as the parent company faces financial challenges.

Vedanta Resources' ongoing efforts to reduce debt have alleviated concerns surrounding its leverage, but the market remains watchful of the group's ability to meet upcoming obligations. While dividends have ensured a steady cash flow, investors are cautious about potential disruptions in a volatile commodity market.

As of 10:40 am, Vedanta shares were trading 1.70% lower at Rs 504.70 on the NSE. Market analysts believe that while Vedanta's dividend yields remain attractive, near-term concerns around its parent company's financial health and profit booking are likely to keep the stock under pressure.