Large cap stock declares dividend of 1850% and sets record date; Are you holding it?

Mining Major Vedanta Ltd said that its board of directors has approved the first interim dividend for the financial year 2023-24. Its shares closed at ₹ 288.60 apiece on the National Stock Exchange (NSE). 

The Mumbai-based company’s board on Monday approved a dividend of ₹ 18.50 per equity share. This dividend is equal to 1850% of the face value of its shares of ₹ 1 and the payout amounts to ₹ 6,877 crores. The record date for the purpose of payment of this dividend is Tuesday, May 30, 2023. 

The Anil Agarwal-led company is known for paying handsome dividends. It paid a total dividend of ₹ 101.50 per share for the financial year 2022-23. 

Vedanta posted a 68 percent fall in its net profit for the January to March quarter (Q4FY23), weighed down by a one-time charge in its oil and gas business. The company’s profit declined to ₹ 1,881 crores in Q4FY23 from ₹ 5,799 crores in the corresponding quarter a year ago (Q4FY22). 

The mining company’s net debt stood at ₹ 44,500 crores, up 115 percent due to dividend payout and higher capex. Its cash and cash equivalents stood at ₹ 21,800 crores. 

With a market capitalization of ₹ 1,06,754 crores, Vedanta Ltd is a large-cap company. It has an ideal return on equity of 20.18% and a very high dividend yield of 24.35 percent. The company’s shares were trading at a price-to-earnings ratio of 10.15 which is lower than the industry average of 12.13 indicating that the stock might be undervalued as compared to its peers. 

Vedanta’s promoters hold a 68.11% stake in the company, followed by retail investors with 13.81% domestic institutions with 9.75%, foreign institutions with 7.88% and mutual funds with 0.45%. 

Written by Simran Bafna 

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