Shares of Vedanta rose sharply in the morning trade on July 20, a day after the company announced a hefty second interim dividend. The government’s decision to slash additional excise duty imposed on crude oil production also gave a boost to the stock.
Vedanta announced a Rs 19.5 a share second interim dividend that will result in a dividend payout of Rs 7,250 crore. The company’s total dividend payout for 2022-23 is now close to Rs 19,000 crore.
The large dividend payout is important for Vedanta’s promoter Vedanta Resources that is hurting from a high debt burden at a time when global interest rates have risen sharply.
Vedanta’s promoter had aggressively taken on debt from investors in the run-up to its now failed delisting offer in 2020.
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Besides the second dividend, the stock also got a boost from the government’s announcement of slashing the fixed special excise duty on crude oil production to Rs 17,000 per tonne from Rs 23,250 per tonne effective from July 20.
Earlier this month, the government surprised the market with a supposed tax on windfall gains being made by crude oil producers like Vedanta because of near eight-year high global crude prices.
Also read: ONGC and Reliance to roar after windfall tax cut: Morgan Stanley
Crude prices have fallen more than 15 percent from their eight-year high of $125 a barrel hit in June and more than 22 percent from the March highs of $137.
While oil production does not contribute substantially to the company’s earnings as of yet, the company has touted recent discoveries in Rajasthan as a game changer for India’s oil needs.
At 10.35 am, shares of Vedanta were up 5.3 percent at Rs 251.4 on the National Stock Exchange.
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