With today's gain, the stock of Vedanta
has recovered 13 per cent in the past four trading days from a level of Rs 95 hit on October 16, 2020. Earlier, in the past three weeks, it had tanked 32 per cent from a level of Rs 140, after the promoter's delisting offer was failed.
In another development, Hindustan Zinc, Vedanta's subsidiary announced a healthy dividend of Rs 21.3 per share i.e. 1065 per cent on face value of Rs 2 per share for the FY21 amounting Rs 9,000 crore on Tuesday. Vedanta, which holds 64.92 per cent stake in Hindustan Zinc as of September 30, is likely to get Rs 5,843 crore by way of dividend.
"While Vedanta will continue to stay listed on the exchanges, and may bear the brunt of failed attempt at de-listing in the near term, the focus will be on, how Vedanta will utilise the $3.15 billion and what could be the operating performance over the next few quarters," said Hemang Jani, Head – Equity Strategy, Broking & Distribution, Motilal Oswal Financial Services.
The discussion around capital allocation will dominate investor concerns, while the operating performance of mining companies is getting better, due to firm commodity prices globally. Book value of Vedanta as of March 31, 2020 was Rs 147.
"While a buyback may not be considered in order to make the next attempt at delisting successful, a generous dividend can be expected given the strong cash on the balance sheet and the need of liquidity by Promoters. But, any increase in intercompany loans will be a negative," MOFSL said in a report. The brokerage has ‘neutral’ rating on the stock.
At 01:43 pm, Vedanta was trading 5 per cent higher at Rs 106 on the BSE, as compared to 0.54 per cent gain in the S&P BSE Sensex. A combined around 59 million equity shares had changed hands on the counter on the NSE and BSE till the time of writing of this report.