Vedanta Shares Surge: What’s Driving Investor Interest?
Introduction: Vedanta, a leading player in the mining sector, has witnessed a remarkable rally in its shares, marking seven consecutive days of growth as of September 27, 2023. The stock has surged over 14% in just a week, prompting investors to take notice. Currently priced at Rs 512.85 on the Bombay Stock Exchange (BSE), Vedanta’s shares reached a peak of Rs 515.85 during intra-day trading, boasting a notable gain of 2.19% on Friday. This impressive increase stands in stark contrast to its one-year low of Rs 207.85 recorded on September 28, 2022, representing a phenomenal rise of 148% in one year.
Reasons Behind the Surge
Several key factors are contributing to the recent spike in Vedanta shares. A major catalyst is the upcoming board meeting scheduled for October 8, where important decisions regarding the fourth interim dividend for the fiscal year 2024-25 will be made. The record date for this dividend has been set for October 16. To date, the company has already approved a substantial dividend totaling Rs 13,474 crore for the financial year.
The Impact of Global Economic Moves
The rise in Vedanta’s stock prices is also propelled by significant economic developments in China, the world’s largest consumer of base metals. The Chinese government has implemented various policy changes, including a reduction in the reverse repo rate aimed at achieving a 5% economic growth target for this year. This decision has positively influenced the global metal market, especially benefitting the prices of aluminium, copper, and nickel—metals crucial to Vedanta’s operations. With approximately half of the world’s base metal consumption occurring in China, these moves are indeed impactful.
Moreover, the US Federal Reserve’s recent decision to cut the benchmark interest rate has further created a favorable landscape for metal companies, including Vedanta. As metal prices rise, the company can expect an improvement in profit margins and overall profitability.
Dividend History of Vedanta
Looking back at Vedanta’s dividend distribution, the company has shown a consistent commitment to rewarding its shareholders. Earlier in September, Vedanta approved its third dividend of Rs 20 per share, which contributes to a total dividend payout of Rs 13,474 crore for the fiscal year 2024-25. In the previous months:
| Dividend Date | Amount per Share | Total Dividend Payout |
|---|---|---|
| May 2023 | Rs 11 | Rs 4,089 crore |
| July 2023 | Rs 4 | Rs 1,564 crore |
| September 2023 | Rs 20 | Rs 13,474 crore (cumulative) |
Conclusion
As Vedanta navigates through a robust economic landscape and maintains its dividend distribution strategy, the outlook for its shares seems bullish. Investors are keenly watching the upcoming board meeting on October 8, which may further influence stock performance. With global economic shifts favoring the base metals market, Vedanta’s growth trajectory appears strong, making it a compelling option for both current and prospective investors.
