17 May , 2024 By : Debdeep Gupta
Shares of Vedanta gained on May 17, a day after the board of the mining conglomerate approved raising up to Rs 8,500 crore. The type of issuance is yet to be finalised, it said in a regulatory filing.
This is the second time the company is raising funds in the current fiscal year. Last month, it said it would raise up to Rs 2,500 crore through debt securities.
Vedanta's Board also approved dividend payment of Rs 11 for each share the shareholders own for FY25, amounting to a total payout of around Rs 4,089 crore. The record date for the dividend payment has been set at May 25.
In the meeting held on May 16, the board also approved investment in Vedanta Copper International (VCI) for setting up a copper rod plant in Saudi Arabia. Post the investment, VCI shall become a direct wholly owned subsidiary of the company, the filing said.
In 2023, the company's subsidiary Malco Energy set up a new unit in Saudi Arabia for a copper business. The incorporated unit was named as 'Vedanta Copper International VCI Company Limited'.
Meanwhile, the conglomerate is looking to raise cash through an issue of equity shares or by way of further public offer, rights issue, or other ways. The move comes as the company aims to reduce its standalone debt by $3 billion over the next three years.
As of March 31, 2024, the company's net debt rose about 25 percent from a year ago to Rs 56,338 crore. Its full-year cash and cash equivalents fell to Rs 2,812 crore from Rs 6,926 crore a year earlier.
Vedanta reported a reduction in net debt to Rs 56,338 crore as of March 31, down Rs 6,155 crore from the preceding three months. The metals-to-oil conglomerate is currently under the process of splitting into six different units.
According to analysts at Nuvama Institutional Equities, rising commodity prices improve cash flows and open up the potential for a rise in valuation multiple. It suggested that Vedanta's debt overhang should subside significantly. Vedanta's debt likely peaked out in FY24, it said.
Meanwhile, Antique Stock Broking recently increased its target price on Vedanta to Rs 411 from Rs 318 earlier, with an implied FY26 EV/Ebitda multiple of 4.2 times, in line with global peers.
At 9:51 am, Vedanta's shares were trading 1 percent higher at Rs 437.45 on the National Stock Exchange (NSE). So far this year, the stock has rallied 70 percent, outperforming benchmark Nifty 50 which has risen around 2.8 percent during this period.
0 Comment