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    Vedanta’s dividend payout fails to cheer Dalal Street bulls; here’s why

    Synopsis

    Adding to the concerns was CRISIL Ratings, who joined the club of global rating agencies by downgrading the outlook on Vedanta’s non-convertible debentures and long-term bank facilities to “negative” from “stable”.

    Vedanta’s dividend payout fails to cheer Dalal Street bulls; here’s whyAgencies
    The interim dividend announced by Vedanta failed to cheer investors on Dalal Street, as they remain concerned about the group’s burgeoning debt and the ability to refinance it.

    The stock was up just 1% at Rs 277.65 on the National Stock Exchange on Wednesday.

    On Tuesday, the mining major announced an interim dividend of Rs 20.5 a share, resulting in a total payout of Rs 7,620 crore.

    The dividend payout news was offset by the resignation of Vedanta’s acting chief financial officer Ajay Goel, as it has come at a time when questions are being raised on the group’s rising debt.

    Adding to the concerns was CRISIL Ratings, who joined the club of global rating agencies by downgrading the outlook on Vedanta’s non-convertible debentures and long-term bank facilities to “negative” from “stable”.

    “The revision in outlook reflects the possibility of higher-than-expected financial leverage and lower financial flexibility with reducing the ratio of cash surplus to 1-year maturities for fiscals 2023 and 2024,” CRISIL said.

    The lower cash surplus is due to increased outflow in the form of dividends, and towards large maturing debt obligations at parent company Vedanta Resources.

    Vedanta has annual debt maturities of around $3 billion each in 2024 and 2025, with high near-term maturities of $1.7 billion in the first quarter of fiscal 2024.

    “In case of a further delay in the expected refinancing plan, the dependence on dividend payout by Vedanta will increase… hence, will be a key rating sensitivity factor,” CRISIL said.

    Earlier this month, Moody's Investors Service downgraded the corporate family rating (CFR) of Vedanta Resources to Caa1 from B3 and retained a “negative” outlook, citing increasing refinancing risks in debt maturities.

    S&P Global Ratings, too, had said that the company's credit ratings might "come under pressure" if it is unable to raise $2 billion or sell its international zinc assets.

    Earlier, media reports had said that promoter Anil Agarwal was exploring the possibility of selling up to 5% stake in the mining company if all other fundraising options failed.

    However, Agarwal denied the same and also assured investors that the group was abiding by its debt obligations.

    (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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