Hindustan Zinc Approves Interim Dividend Despite Stock Decline

Hindustan Zinc Declares Interim Dividend of ₹10 Per Share for FY25 Despite Market Reaction

On June 11, 2025, leading metal producer Hindustan Zinc announced a significant interim dividend of ₹10 per equity share for the financial year 2025-26 (FY25). This represents a 500% payout on the face value of ₹2 per share. The company’s Board of Directors approved this dividend via a resolution passed by circulation at 12:56 pm on June 11, 2025. As per the official communication, the record date for determining eligible shareholders to receive the dividend has been fixed as Tuesday, June 17, 2025. The total outflow on account of this dividend payment stands at ₹4,225 crore and will be disbursed within the legally stipulated timelines.

Despite the generous dividend declaration, the company’s stock did not reflect a positive response. On the same day, shares of Hindustan Zinc dropped by more than 2%, closing at ₹520 on the Bombay Stock Exchange (BSE). As a result of this decline, the company's market capitalization fell to ₹2.20 lakh crore.

This is not the first time Hindustan Zinc has declared a high interim dividend. In August 2024, the company paid out an interim dividend of ₹19 per share, indicating a strong dividend-paying history and a commitment to returning value to shareholders.

In terms of financial performance, Hindustan Zinc showed notable improvement in key financial metrics for the recent period. Year-on-year revenue for the March quarter rose by 20%, reaching ₹9,087 crore. The net profit saw a significant 47% jump to ₹3,003 crore. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) also recorded a 32% rise, standing at ₹4,820 crore. Moreover, the company improved its operational efficiency, with EBITDA margins expanding by nearly 500 basis points to 53%, a substantial leap indicating cost optimization and better profitability.

The shareholding structure of Hindustan Zinc, as of the March 2025 quarter, highlights strong promoter and government ownership. Vedanta Ltd, the promoter of Hindustan Zinc, holds a majority 63.42% stake in the company. Meanwhile, the Government of India owns a 27.92% share, and retail investors account for a smaller 2.48% stake. This significant government holding stems from Hindustan Zinc's earlier history as a public sector enterprise, and the central government continues to play an important role as a shareholder.

Last year, Vedanta Ltd, the parent company, received a substantial dividend payout amounting to ₹5,091 crore from Hindustan Zinc. This reinforces the company’s ability to generate healthy profits and return a sizeable portion to its stakeholders. The latest dividend of ₹10 per share is another testament to Hindustan Zinc’s strong cash flows and commitment to rewarding its shareholders.

Overall, while the market reacted negatively to the stock following the dividend announcement, possibly due to profit-booking or broader market sentiments, Hindustan Zinc’s financials, dividend policy, and shareholder returns remain robust, underlining its strong position in the Indian metals sector. The company’s performance and generous payouts continue to make it an attractive proposition for long-term investors focused on income and growth.