Hindustan Zinc (HZL), an integrated producer of zinc and silver, is likely to announce a special dividend of INR 6,000 crore to its shareholders this month, according to sources. Last month, the National Company Law Tribunal (NCLT) had approved the transfer of INR 10,383 crore from the company’s general reserves to retained earnings.
The board is likely to meet over the next two weeks to decide on the payout, said one of the sources. Hindustan Zinc declined to comment.
The special dividend, which translates into a payout of INR 14.2 per share for shareholders, will be in addition to the regular annual dividend.
Vedanta, which holds a 64.92% stake in Hindustan Zinc, will receive INR 3,895 crore in the event of the dividend payout. The company may use the special dividend to cut debt. The government with a 29.54% stake is expected to receive INR 1,772 crore.
The Jaipur bench of the NCLT issued the order on July 16, allowing the reclassification and transfer of funds from general reserves to retained earnings. The total reserves of the company as of March 31, 2024, was INR 14,350 crore while the total debt was INR 8,722 crore.
In the financial year ended March 2024, Hindustan Zinc paid a total dividend of INR 5,493 crore. In FY23, the company made a record dividend payout of approximately INR 32,000 crore, with the government receiving INR 9,500 crore.
Hindustan Zinc shares have returned 87% so far in 2024 compared to an 11% gain in the Sensex. During the June quarter, Hindustan Zinc’s market-cap more than doubled, adding nearly INR 1.6 lakh crore.
For the quarter ended June, HZL reported a 12% year-on-year revenue growth to INR 8,130 crore, a 17% increase in EBITDA, and a 19% rise in profit after tax to INR 2,345 crore. Additionally, the company generated a free cash flow from operations of INR 3,432 crore.
