Coal India Ltd., the world’s largest producer, surged the most in more than four months after announcing a record $3 billion interim dividend for the year ending March 31.
The shares jumped as much as 6.6 percent to 307.85 rupees, the most since Sept. 5, and traded at 302 rupees as of 9:16 a.m. in Mumbai. The company, owned 90 percent by the federal government, said yesterday it will pay an interim dividend of 29 rupees a share, or 183.2 billion rupees ($3 billion), for this fiscal year, pushing the dividend yield to 10 percent from 4.84 percent. The announcement came after trading closed.
The finance ministry expects to raise 150 billion rupees selling shares in state-owned companies for the year ending March 31, less than half its targeted amount. That’s adding pressure to extract special dividends as the government pushes to prevent a sovereign credit-rating downgrade to so-called junk. The dividend will be paid starting Jan. 25, it said.
“The dividend came as a positive surprise and investors would be hoping that the company maintains this trend of payouts,” said Giriraj Daga, a Mumbai analyst at Nirmal Bang Equities Pvt., who has a sell recommendation on Coal India. “For the stock to be upgraded, the company will need to boost its earnings and dividend payments.”
Until now, the highest dividend Coal India had paid since listing in 2010 was 88.4 billion rupees for the year ended March last year, according to data compiled by Bloomberg.
Prime Minister Manmohan Singh set a goal to pare the budget deficit to a six-year low of 4.8 percent of gross domestic product this fiscal year. The shortfall in the eight months through November reached 94 percent of the full-year target of 5.4 trillion rupees.
India’s credit rating may be cut to junk in 2014 unless the general election due by May leads to a government capable of reviving economic growth, Standard & Poor’s said in November.