Vedanta Ltd. rallied after India’s biggest base metals producer announced a record dividend worth $1.2 billion, potentially helping its London-listed parent pare debt.
Vedanta, owned by billionaire Anil Agarwal, reversed from a loss to climb as much as 2.1 percent in Mumbai, while Vedanta Resources Plc surged 2.9 percent in London, after its board approved 21.2 rupees a share for a payout of 78.81 billion rupees, its best-ever dividend and topping a record in 2017.
The dividend, which is about double market expectations, will allow parent Vedanta Resources to trim some of its borrowings, Goutam Chakraborty, an analyst at Emkay Global Financial Services Ltd., said.
Vedanta Resources’ debt was almost $18 billion at the end of the last fiscal year, according to data compiled by Bloomberg, while Vedanta Ltd. owed $11 billion. The Mumbai-based company mines and produces a variety of metals, including copper, zinc and aluminum. Base metals traded in London have risen 17 percent over the past year.
Vedanta’s credit profile will benefit over the medium term supported by improved profitability of its aluminum operations, an expected increase in volume across businesses, and a reduction in net financial leverage, Crisil Ltd., an Indian unit of S&P Global Inc., said.