News

Published: May 17, 2024
Updated: May 17, 2024

Vedanta Approves Rs 8,500 Crore Fundraise and Declares Rs 11 Interim Dividend

Significant Fundraising Effort:

Vedanta Ltd announced on Thursday that its board has approved a substantial fundraise of up to Rs 8,500 crore. The Anil Agarwal-led conglomerate plans to decide on the structure of this fundraising through its committee of directors, which includes options for issuing equities and other financial instruments. This marks the second fundraising effort by the company in the current fiscal year, following a previous announcement to raise Rs 2,500 crore through debt securities last month.

Interim Dividend Declaration:

In addition to the fundraising approval, Vedanta declared its first interim dividend for the financial year 2024-25 (FY25) at Rs 11 per equity share, totaling Rs 4,089 crore. The company has set Saturday, May 25, 2024, as the record date for the dividend payment, which will be processed within the legally stipulated timelines.

Financial Position and Market Reaction:

As of March 31, 2024, Vedanta's net debt had increased by approximately 25% year-on-year to Rs 56,338 crore, while its cash and cash equivalents fell to Rs 2,812 crore from Rs 6,926 crore a year earlier. The announcements, made post-market hours, led to Vedanta shares slipping 0.96% to settle at Rs 433.20.

Strategic Restructuring:

Vedanta is currently in the process of splitting into six different units, a strategic move aimed at enhancing operational efficiency and unlocking value for shareholders.

Expert Opinions:

Experts suggest that rising commodity prices could significantly improve Vedanta’s cash flows and potentially increase its valuation multiple. They also predict that the company’s debt burden is likely to have peaked in FY24 and should decline moving forward.

Vedanta's aggressive fundraising and strategic dividend declaration are part of a broader strategy to manage its debt and enhance shareholder value. As the company undergoes significant restructuring and capital management efforts, it remains a key player to watch in the metals-to-oil sector.