Hindustan Zinc dividend sweetens deal for offer for sale investors

Commodity major declares second interim dividend of Rs 19 a day after OFS concluded

Hindustan Zinc (HZL) has sweetened its offer for sale (OFS) to investors by declaring an interim dividend of Rs 19 per share. The dividend — amounting to a yield almost 4 per cent over the OFS price — was announced on Tuesday, a day after the OFS included. The integrated zinc and silver manufacturer has set the ex-date of August 28 for the dividend payout.

This is HZL’s second interim dividend and the first payout of Rs 10 in May. The total dividend payout for FY25 has touched Rs 12,253 crore, or Rs 29 per share. With this, HZL has strengthened its place as one of the top dividend-yielding stocks in the listed universe.

 

Underpinned by strong performance, the total dividend paid by the company in the last five financial years between FY20 and FY24 has touched almost Rs 61,000 crore, averaging over Rs 12,000 crore a year.

A large part of this has gone to the government, which holds 29.54 per cent stake in HZL.

Shares of the Anil Agarwal-led firm last traded at Rs 511 per share. Through the OFS that concluded on Monday, Agarwal’s Vedanta pruned 1.51 per cent stake in HZL to raise close to Rs 3,200 crore, which will be used to pare its debt. Following the stake sale Vedanta’s stake in HZL has declined to 63.42 per cent. While the floor price for the OFS was set at Rs 486 per share, most of the bids had come around Rs 495.

Besides high dividend payouts, shareholders of HZL have also benefited from the stock’s robust performance. Shares of the company have rallied over 60 per cent on a year-to-date basis, outperforming the Nifty 50 index which is up 14 per cent.

In the quarter ended June 2024 (Q1FY25), HZL had reported a 12 per cent year-on-year growth in revenue to Rs 8,130 crore underpinned by steady volume growth. Its operating profit grew 17 per cent and a 19 per cent rise in net profit to Rs 2,345 crore.

HZL’s silver output has grown more than two-fold over the past decade, making it the third-largest silver producer in the world and the only one in India. It is also looking to further diversify its portfolio by adding other commodities such as critical minerals lithium, rare earth elements (REE) and gold.

The company plans to demerge into two, with one housing the zinc and lead vertical and the other focusing on silver. Analysts believe the demerger could help unlock value to the tune of Rs 20,000 crore.