Hindustan Zinc likely to announce Rs 6,000-crore special dividend: Report

In the financial year ending March 2024, Hindustan Zinc distributed Rs 5,493 crore in dividends.

Hindustan Zinc (HZL), a leading integrated producer of zinc and silver, is expected to declare a special dividend amounting to Rs 6,000 crore this month, The Economic Times reported, citing industry sources. This potential payout follows the recent approval from the National Company Law Tribunal (NCLT) to transfer Rs 10,383 crore from the company's general reserves to retained earnings.

According to one of the sources mentioned in the report, the HZL board is anticipated to convene within the next two weeks to finalise the dividend. Hindustan Zinc has declined to comment and Moneycontrol did not independently verify the report.

The proposed special dividend translates to Rs 14.2 per share for shareholders, adding to the regular annual dividend. Vedanta, which holds a 64.92 percent stake in Hindustan Zinc, stands to receive Rs 3,895 crore, potentially aiding the company in reducing its debt. The government, with a 29.54 percent stake, is expected to receive Rs 1,772 crore.

The NCLT’s Jaipur bench issued the order on July 16, permitting the reclassification and transfer of funds from general reserves to retained earnings. As of March 31, 2024, Hindustan Zinc had total reserves of Rs 14,350 crore and a total debt of Rs 8,722 crore.

In the financial year ending March 2024, Hindustan Zinc distributed Rs 5,493 crore in dividends. The previous fiscal year saw a record dividend payout of approximately Rs 32,000 crore, with the government receiving Rs 9,500 crore.

Hindustan Zinc shares have surged 87 percent in 2024, significantly outperforming the Sensex's 11 percent gain. During the June quarter, the company's market capitalisation more than doubled, adding nearly Rs 1.6 lakh crore.

For the quarter ended June, Hindustan Zinc reported a 12 percent year-on-year increase in revenue to Rs 8,130 crore, a 17 percent rise in EBITDA, and a 19 percent growth in profit after tax, reaching Rs 2,345 crore. The company also generated Rs 3,432 crore in free cash flow from operations during the same period.