Hindustan Zinc gains over 2% on reports of ₹6,000-crore special dividend announcement

According to an Economic Times report, the board of directors at Hindustan Zinc is expected to convene a meeting within the next two weeks to finalise the dividend.

This translates into an additional dividend of ₹14.2 per share for Hindustan Zinc shareholders in addition to the regular annual dividend. The company announced an interim dividend of ₹10 per share in May this year. In the last financial year, 2023-24, Hindustan Zinc distributed ₹5,493 crore in dividends.

Reacting to the news of a likely special dividend announcement, shares of Hindustan Zinc rose as much as 5.7% on Monday to hit an intraday high of ₹627.9 apiece on the National Stock Exchange of India (NSE). The stock has fallen 8.5% this month but is up 91% year-to-date.

The biggest beneficiary of the said special dividend would be Hindustan Zinc’s parent company, Vedanta, which holds a 64.92% stake in the company.

If the dividend is approved, Vedanta would receive nearly ₹3,895 crore, which can help reduce its debt. The central government, another major shareholder that owns a 29.54% stake in Hindustan Zinc, is expected to receive ₹1,772 crore.

The news of the special dividend follows the recent order issued by the National Company Law Tribunal (NCLT)’s Jaipur bench on July 16, allowing Hindustan Zinc to transfer ₹10,383 crore from its general reserves to retained earnings. As of March 2024, Hindustan Zinc had total reserves of ₹14,350 crore.

Hindustan Zinc shares are trading 3.75% higher at ₹ 616 apiece on the NSE at 12:15 pm.