Hindustan Zinc planning dividend payout of Rs 8,000 cr

HZL's board is expected to meet on Tuesday to review and approve the special dividend for this fiscal year.

This special dividend will be in addition to the regular annual dividend of around Rs 6,000 crore that HZL typically distributes.

The payout will not only benefit the government but also the promoter, Vedanta Ltd, which holds a roughly 65 percent stake in HZL.

Vedanta is expected to receive around Rs 5,100 crore from this dividend, which it may use to further reduce its debt.

"Of this, around 30 per cent or Rs 2,400 crore may go to the Centre contributing to its non-tax revenues for the fiscal," sources were quoted as saying by PTI.

The move follows the National Company Law Tribunal's (NCLT) approval to transfer Rs 10,383 crore of general reserves to its retained earnings.

Vedanta plans to sell up to a 3.31 percent stake in Hindustan Zinc Ltd (HZL) via an Offer for Sale (OFS) from August 16 to 19, with a floor price set at Rs 486 per share.

HZL has shown steady growth in sales volumes and maintained balanced capital expenditure, resulting in a solid track record of generating cash flows.

The company expects this upward trajectory to continue, as detailed in a scheme of arrangement filed with the NCLT, projecting ongoing cash flow growth in the coming years.

In the fiscal year ending March 2024, HZL paid out a total dividend of Rs 5,493 crore, with the government receiving Rs 1,622 crore for its 29.5 percent stake.

The previous fiscal year saw a record Rs 32,000 crore dividend payout, with the government receiving Rs 9,500 crore.

During the June quarter, HZL's market capitalization more than doubled, adding Rs 1.6 lakh crore and reaching its highest-ever market cap of Rs 3.4 lakh crore.

The Rs 6,500 crore OFS will launch on Friday, auctioning over 120 million shares for non-retail investors, with the remaining 13.4 million shares, valued at Rs 650 crore at the base price, set for sale on Monday.

HZL shares ended Wednesday at Rs 573, down 1.3 percent, with the floor price set 15 percent below the last close. Investors are required to place bids above the floor price in the OFS.

Citibank and JM Financial are managing the share sale, with Vedanta looking to divest 3.17 percent of its 64.92 percent stake in HZL.