16 hours ago
Brokerage firm Citi believes that Anil Agarwal-owned mining conglomerate Vedanta Ltd. is likely to pay a lower dividend to its shareholders in financial year 2026, compared to financial year 2025.
Citi is anticipating a dividend payout of ₹34 per share for financial year 2026, compared to the ₹43.5 per share that the company has already announced for financial year 2025.
Dividend estimates for financial year 2025 have also been revised lower to ₹47 per share from ₹61 per share earlier.
Vedanta reported its March quarter results on Wednesday, where its revenue went up by 14% from last year, while Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) increased by 31% on a year-on-year basis. Margins also saw an expansion of close to 400 basis points.
In an interaction with CNBC-TV18 after the results, the Vedanta management said that the demerger remains on track and is likely to be completed by September this year. The company is also targeting a 10% higher profitability in financial year 2026.
Citi has a "buy" rating on Vedanta with a price target of ₹500 per share, which implies a potential upside of 19% from Wednesday's closing levels.
Parent leverage at comfortable levels, potential medium-term aluminium LME upside, likely lower costs and likely completion of the demerger process are some key factors that are driving Citi's bullish stance on the mining major.
The brokerage said that every $100 per tonne change in Zinc or Lead LME prices impacts Vedanta's EBITDA by 2% and fair value by ₹18 per share, while every $100 per tonne change in Aluminium LME impacts Vedanta's EBITDA by nearly 5% and fair value by ₹30 per share.
At the end of the March quarter, Vedanta had nearly 20 lakh small shareholders, or those with authorised share capital of up to ₹2 lakh, who had an 11.25% stake in the company. Promoters had a 56.38% stake.
Among the 15 analysts that have coverage on Vedanta, 10 of them have a "buy" rating on the stock, four of them have a "hold" rating, while one has a "sell" recommendation.
Shares of Vedanta are trading 0.2% higher at ₹420.1 on Friday.
