Vedanta shares increase by 2% despite the stock’s ex-dividend date; futures trade at a discount.
Even after the stock went ex-dividend on May 30, Vedanta’s shares were able to increase by 2% to Rs 287.45. When a stock becomes ex-dividend, its price typically decreases. This was not the case with Vedanta, however.
Last week, the company’s board of directors adopted a first interim dividend of Rs 18.50 per share for the fiscal year 2023-24, which shareholders will be entitled to receive in the coming days. The record date for the dividend payment has been set for May 30, 2023, which means that investors who purchase shares after today will not be entitled to the dividend.
The mining colossus will pay its shareholders a total of Rs 6,877 crore. The interim dividend will be paid within the timeframes specified by law, according to the company’s regulatory filing.
However, Vedanta stock futures were trading at a discount to market prices and were down more than 5 percent.
The promoter of Vedanta Ltd., Vedanta Resources Plc, created a pledge on 4.4% of its total holdings in the company on May 25, according to data from the exchanges. A commitment in favour of Glencore International to borrow $250 million has been made. Revenue-wise, Glencore is the largest mining company in the globe.
The economics
The March quarter profit for Vedanta decreased by 56.3% year-over-year to Rs 2,634 crore compared to Rs 6,027 crore in the same quarter of the previous fiscal year.
The company’s net profit attributable to its proprietors decreased by over 67 percent year-over-year to Rs 1,881 crore.
Similarly, revenue decreased 5.4% to Rs 37,225 crore from Rs 39,342 crore in Q4 FY22. The company’s operating EBITDA decreased by 33.4 percent to Rs 8,754 crore.
The revenue generated from zinc, lead, and silver decreased by 4% to Rs 8,254 crore. The revenue from aluminium decreased by 19.8 percent to Rs 12,396 crore, while revenue from copper and iron ore increased.
Analyst perspective
Analysts note that the commodities market faces multiple headwinds, including inflationary pressure, a weak macroeconomic scenario, recessionary pressures in Europe, a liquidity crisis in some developing countries, a muted demand recovery in China, and a slowdown in the Chinese real estate market. These factors exert pressure on Vedanta’s performance.
The stock has declined 8.70 percent over the past year, whereas the Sensex has increased 12.51 percent.
