Vedanta shares jump after record dividend payout

Vedanta reversed from a loss to rise as much as 2.1% in Mumbai, after its board approved 21.2 rupees a share for a payout of 78.81 billion rupees, its best-ever dividend and topping a record last year.

Vedanta Ltd. rallied after India’s biggest base metals producer announced a record dividend worth $1.2 billion, potentially helping its London-listed parent pare debt.

Vedanta Resources’ debt was almost $18 billion at the end of the last fiscal year, according to data compiled by Bloomberg. (REUTERS FILE)

Vedanta, owned by billionaire Anil Agarwal, reversed from a loss to climb as much as 2.1% in Mumbai, while Vedanta Resources Plc surged 2.9% in London, after its board approved 21.2 rupees a share for a payout of 78.81 billion rupees, its best-ever dividend and topping a record last year. A 7.5% payment on preference shares took the total to 80.91 billion rupees for the fiscal year through March.

The dividend, which is about double market expectations, will allow parent Vedanta Resources to trim some of its borrowings, Goutam Chakraborty, an analyst at Emkay Global Financial Services Ltd., said by phone from Mumbai.

Vedanta Resources’ debt was almost $18 billion at the end of the last fiscal year, according to data compiled by Bloomberg, while Vedanta Ltd. owed $11 billion. The Mumbai-based company mines and produces a variety of metals, including copper, zinc and aluminum. Base metals traded in London have risen 17% over the past year.

Vedanta’s credit profile will benefit over the medium term supported by improved profitability of its aluminum operations, an expected increase in volume across businesses, and a reduction in net financial leverage, Crisil Ltd., an Indian unit of S&P Global Inc., said in a report March 12.