(Bloomberg) — Billionaire Anil Agarwal’s Vedanta Ltd. will pay a dividend to investors for a third time this financial year as a rally in commodity prices boosts earnings, with the payout potentially helping relieve some of the debt-repayment pressure on its parent.
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Vedanta approved a dividend of 13 rupees a share, totaling 48.3 billion rupees ($638 million), according to an exchange-filing Wednesday. That takes the total dividend outflow to $2.2 billion in the year set to end this month, according to Bloomberg calculations.
While the dividend may provide near-term liquidity support to its London-based parent Vedanta Resources Ltd., it may not be enough to defuse pressure on its credit profile and bond spreads, Mary Ellen Olson, senior credit analyst at Bloomberg Intelligence, said on Friday. Liquidity pressure on Vedanta Resources may intensify in the coming weeks as concerns remain focused on its ability to tap financial markets to refinance a $1 billion bond due in July, she said.
Globally, the mining sector, which has seen a record-breaking earnings season, has been rewarding shareholders with massive dividends. The Mumbai-based commodities major had paid out dividends in September and December as aluminum prices surged and gas prices climbed. Vedanta Ltd.’s quarterly profit jumped 26% in the October-December period.
Last month, Agarwal ruled out plans to restructure the Indian company and spelled out a dividend policy, which includes distributing profits of unit Hindustan Zinc Ltd. to shareholders within six months.
Shares of Vedanta Ltd. have rallied more than 80% in the past year and closed 1.8% higher in Mumbai on Wednesday.
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