Dividend Stock: Hindustan Zinc Ltd Announces Special Dividend
Hindustan Zinc Ltd (HZL), a leading mining and metals company and a part of the Vedanta group, has recently announced a special dividend of Rs 8,000 crore for the current fiscal year. This substantial payout is set to benefit both the company’s shareholders and the Indian government, with approximately 30 percent, or Rs 2,400 crore, expected to contribute to the government’s non-tax revenues.
The decision to distribute a special dividend comes following the National Company Law Tribunal’s (NCLT) approval to transfer Rs 10,383 crore from general reserves to retained earnings. The company’s board is scheduled to meet to review and approve this significant payout, which will be in addition to the regular annual dividend of around Rs 6,000 crore that HZL traditionally distributes.
One of the major beneficiaries of this special dividend will be Vedanta Ltd, the promoter of HZL, which holds a 65 percent stake in the company. Vedanta is expected to receive approximately Rs 5,100 crore from this special dividend, which it may utilize to further reduce its debt. In line with this, Vedanta is also planning to sell up to 3.31 percent of its stake in HZL through an Offer for Sale from August 16 to 19, with a floor price set at Rs 486 per share.
HZL’s strong performance, characterized by steady sales growth and balanced capital expenditure, has been instrumental in its robust cash flow generation. The company has projected continued growth and incremental cash flow from its operations in the coming years, reflecting its commitment to delivering value to its shareholders.
In the previous financial year ending March 2024, Hindustan Zinc paid a total dividend of Rs 5,493 crore, with the government receiving Rs 1,622 crore for its 29.5 percent stake in the company. The company’s record dividend payout in FY22-23 was around Rs 32,000 crore, with the government receiving Rs 9,500 crore, highlighting its consistent track record of rewarding its shareholders.
During the June quarter, Hindustan Zinc witnessed a significant increase in its market capitalization, soaring to a record Rs 3.4 lakh crore, reflecting a remarkable increase of nearly Rs 1.6 lakh crore. This growth is a testament to the company’s strong performance and investor confidence in its future prospects.
In conclusion, Hindustan Zinc’s announcement of a special dividend underscores its commitment to creating value for its shareholders and rewarding their trust in the company. With a strong financial performance and a strategic focus on growth, HZL is well-positioned to continue delivering sustainable returns to its investors in the years to come.