Vedanta is changing its policy that assured at least 30% profit gets distributed as dividend

Vedanta Ltd is set to overhaul its dividend policy, moving from a structure that guarantees a fixed minimum payout to a more flexible, board-driven approach; This could impact sentiment among investors who have long relied on the company’s predictable returns.

The mining giant had earlier committed to paying at least 30 per cent of its profits as dividends and now the board will have the flexibility to pay 30 per cent or whatever amount it sees fit, chief financial officer Ajay Goel announced the move during a post-earnings call with analysts last week.

Speaking about the change, Goel said the company’s dividend framework will shift from a “prescriptive” model to a more “principles-based” model. Vedanta’s FY26 dividend payout was the lowest since FY21.

Because timing is important vedanta It is in the midst of a split into five separately listed entities, and the spun-off entities will have a similar but separate dividend policy. Goel told analysts that the company now has the flexibility to transfer the dividends it receives from its subsidiary Hindustan Zinc to its own shareholders.

Earlier, Vedanta had said in its dividend policy document that it would transfer the “entire dividend income (excluding taxes)” it received from Hindustan Zinc to its shareholders within six months.

A Vedanta spokesperson said in an email. MintHe said the change ‘should not be read as a reduction in the dividend payment rate’. The spokesman said this, but dividend As payouts were lower in FY26, the company highlighted a Total Shareholder Return (TSR) of 93% in FY26, compared to 16% in the previous year, as evidence of effective deployment of capital. Total shareholder return for Vedanta is the overall return from a stock, including price gains and dividends.

But with the minimum guaranteed amount gone and the board of five now allowed to redirect cash “in case it is needed elsewhere in the business”, analysts said the investment scenario for Vedanta as a return-generating stock has changed.

One floor removed

At least one analyst believes the change introduces a new layer of uncertainty and leads to a possible reduction in payouts.

“This shift in dividends is quite significant. Earlier, the company had a clear commitment to distribute around 30% of profits, which provided visibility to investors and made the stock attractive in terms of yield,” said Suman Kumar, metals and mining analyst at brokerage firm Philip Capital.

“Now with the move to a more discretionary policy, that certainty has disappeared; the board has the flexibility to increase payouts but also cut them if cash is needed elsewhere in the business. In fact, what was once a predictable and important part of the investment case is becoming less assured going forward,” said Philip Capital’s Kumar.

“Given the demerger and creation of five companies, it would be prudent to create greater flexibility within the policy framework to enable each company’s Board of Directors to act in the best interest of its shareholders/investors,” a Vedanta spokesperson said in an email. Mint.

The spokesman said the policy gives the company greater flexibility to decide capital allocation in the best interests of its shareholders.

Vedanta’s dividend payout to shareholders falls in FY26 ₹13,279 crore, ₹16,772 crore in FY25 and the lowest payment since FY21 when it was paid ₹3,519 crore, according to the company’s stock exchange filings and annual reports.

But another analyst said this policy was not surprising.

According to the management, post splitEach of the five organizations will have its own policy; “Boards will return the same way,” Investec research analyst Ritesh Shah wrote in an April 30 note. “We are not surprised by the change in policy as the maturity of VRL (parent Vedanta Resources Ltd) declines,” Shah said in his note.