Hindustan Zinc cheers investors with dividend; stock rises 2%

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.

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

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.

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.

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.