Hindustan Zinc cheers investors with dividend; stock rises 2%

/ 3 min read

The Vedanta Group company has declared its second dividend of ₹15.50 a share, or 775%, for FY23, amounting to ₹6,549.24 crore.

Hindustan Zinc announced its first dividend of ₹21 for FY23 in June this year.
Hindustan Zinc announced its first dividend of ₹21 for FY23 in June this year. | Credits: Narendra Bisht

Shares of Hindustan Zinc climbed over 2% in intraday trade on the Bombay Stock Exchange on Thursday after the Vedanta Group company announced an interim dividend of around ₹6,549 crore for its shareholders. The mining company declared a dividend for the second straight quarter of the current fiscal despite reporting a decline in the consolidated top and bottom line on a sequential basis due to spiralling energy prices and mounting inflationary pressures.

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The company will pay a second interim dividend of ₹15.50 a share, or 775%, for the current financial year 2022-23, it said in a post market hour filing on Wednesday. The record date for dividend payment is November 24, 2022.

Boosted by the dividend announcement, Hindustan Zinc share price opened 1% higher at ₹322.40, against the previous closing price of ₹319.05 on the BSE. During the session so far, the mining stock rose as much as 2.4% to hit a high of ₹3,326.75, while market capitalisation (m-cap) surged to ₹1.37 lakh crore. The counter witnessed strong volume trade, which nearly tripled to 2.09 lakh as compared to the two-week average volume of 0.73 lakh shares.

A subsidiary of mining giant Vedanta, Hindustan Zinc has given a negative return of 2.6% to its shareholders in the past one year. The largecap stock has risen 10% in six months, while it gained 1.3% on a year-to-date (YTD) basis. In the past one month, the stock has gained some momentum and jumped nearly 17%, while it rose nearly 10% in a week.

Hindustan Zinc declares 775% dividend

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The Udaipur-headquartered company, engaged in mining and producing of commodities such as zinc, lead, silver, and cadmium, on Wednesday announced that its board has approved second interim dividend of ₹15.50 per equity share, or 775% on face value of ₹2 per share for the financial year 2022-23, amounting to ₹6,549.24 crore. Earlier in June this year, the company had declared an interim dividend of ₹21 a share for FY23, amounting to ₹8,873 crore.

As per report, Hindustan Zinc parent, Vedanta Ltd, which owns a 64.92% stake in the company, is expected to get around ₹4,252 crore of the total interim dividend of ₹6,549 crore. Meanwhile, the government, which holds a 29.5% share in the company, will be paid ₹1,932 crore dividend.

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The dividend boost is likely to lift investors’ sentiment who remained concerned about the rising input commodity prices and mounting inflationary pressures. As of September 30, 2022, the company has a total standalone debt of ₹ 2,127 crore.

For the second quarter ended September 2022 (Q2 FY23), Hindustan Zinc reported a 32.8% year-on-year (YoY) growth in its consolidated profit to ₹2,680 crore but it declined 13% sequentially.

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Similarly, revenue from operations increased 36% YoY to ₹8,127 crore from the year-ago quarter, while it corrected by 11% on a quarter-on-quarter (QoQ) basis.

Earnings before interest, tax, depreciation and amortisation (EBITDA) grew 32% YoY to ₹4,390 crore. However, EBITDA dropped 17% sequentially on account of high power and fuel costs.

During the quarter under review, mined metal production stood at 255 kilotonnes (kt), up 2.8% YoY on account of better grades and improved mill recoveries. On a sequential basis, mined metal production grew by 1.4% largely on account of better grades. Overall for H1 FY23, mined metal production was 507 kt, an increase of 8% YoY owing to increased ore production, further supported by better grades and improved operational efficiencies.

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