Hindustan Zinc Expected to Announce Rs 6,000 Crore Special Dividend

Hindustan Zinc Ltd (HZL), a prominent name for zinc and silver, is expected to declare a special dividend amounting to Rs.6,000 crore this month, according to industry reports which comes on the heels of a recent order by the National Company Law Tribunal (NCLT), allowing the company to transfer Rs.10,383 crore from its general reserves to retained earnings.

Board Meeting & Dividend Breakdown

The HZL board is likely to convene within the next two weeks to finalize the dividend decision. The special dividend would equate to Rs.14.2 per share, offering shareholders a huge payout in addition to the regular annual dividend. Vedanta Ltd., which owns a 64.92% stake in Hindustan Zinc, stands to receive approximately Rs.3,895 crore from this payout and it may plan to use the proceeds to reduce its debt burden.The Indian government, holding a 29.54% stake, is expected to gain Rs.1,772 crore. 

NCLT Approval & Financial Reserves

The Jaipur bench of the NCLT approved the transfer of Rs.10,383 crore from Hindustan Zinc’s general reserves to retained earnings on July 16, 2024. As of March 31, 2024, Hindustan Zinc held total reserves of Rs.14,350 crore, with a total debt of Rs.8,722 crore.

Financial Performance

In FY24, Hindustan Zinc distributed Rs.5,493 crore in dividends. The previous fiscal year saw a record payout of Rs.32,000 crore, with the government receiving Rs.9,500 crore. The company has demonstrated a good financial performance, with its shares surging 87% in 2024, significantly outpacing the Sensex’s 11% gain. In Q1FY25, Hindustan Zinc’s market capitalization more than doubled, adding nearly Rs.1.6 lakh crore.

For Q1FY25, HZL reported a 12% year-on-year revenue growth to Rs.8,130 crore, a 17% increase in EBITDA, and a 19% rise in profit after tax to Rs.2,345 crore. The company also generated Rs.3,432 crore in free cash flow from operations during this period.

Conclusion: In conclusion, with strong financial reserves and the current performance, Hindustan Zinc’s anticipated Rs.6,000 crore dividend is set to provide a boost in value to its shareholders while aiding Vedanta in reducing its debt.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.