Hindustan Zinc has announced its fourth interim dividend for FY23. The Anil Agarwal-led company announced dividend of Rs 26 per share, totalling Rs 10,986 crore. This is in addition to Rs 13 per share dividend the metals & mining company it announced in January, Rs 15.50 per share dividend it paid in November and Rs 21 interim dividend it went for in July last year. With this dividend, Hindustan Zinc has announced Rs 75.50 per share dividend in FY23 so far.
The dividend announced by the world's second-largest integrated zinc producer and sixth-largest silver producer globally will help Vedanta earn Rs 7,132 crore in dividend payout on 2,74,31,54,310 shares it held in the company as of December-end. Vedanta held 64.92 per cent stake in Hindustan Zinc as of December 31.
Recently, reports emerged that the Centre was upset about Vedanta's proposal to sell international zinc assets, as it felt the move would hinder and distort the government's plan to dispose its residual stake in Hindustan Zinc. To recall, the Centre opposed Vedanta's proposal to sell its international zinc assets to Hindustan Zinc for $ 2.98 billion over concerns about valuations.
Following the fresh development, shares of Hindustan Zinc were trading 2.82 per cent higher at Rs 319.20 by 9.45 am. The scrip hit a high of Rs 325.25 in Wednesday’s session so far.
But foreign brokerage Citi has suggested a 'sell' rating on the stock with a target of Rs 260 per share. Following the dividend, the company will turn net debt from net cash, it said. The brokerage, as per a media report, said the stock is trading at 6.7 times one-year forward EV/Ebitda, which was higher than the average of 6.5 times since 2016.
The record date for the fresh dividend is March 29. The dividend would be paid to those shareholders, whose names will appear on the register of members of the company or in the records of the depositories as beneficial owners of the shares, as on Wednesday, March 29. The dividend will eventually be paid to eligible shareholders on April 20.
"Hindustan Zinc looks weak from here. After this dividend almost all cash reserves are out. If the commodity cycle turns around, debt would rise. On the other hand, the government would also try to sell its stake," said Ravi Singhal, CEO at GCL.
Data available with corporate database AceEquity suggests Hind Zinc dividend yield stood at 6.1 per cent in FY21 and 5.2 per cent in FY22. Its dividend yield for now stands at 5.62 per cent.
Also read: Tata Motors shares rise as Tata group firm announces 5% hike in commercial vehicle prices
Also read: Devyani International shares in focus as Franklin Templeton Fund buys stake in block deal