Hind Zinc to turn net debt from net cash after Rs 11,000-cr dividend payout: Analysts

Total dividend announced by Hindustan Zinc for FY23 thus far is Rs 75.5 per share, implying cash outflow of $3.9 billion (close to Rs 32,000 crore)

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After the latest dividend payout amounting to Rs 10,985.83 crore, Hindustan Zinc will turn net debt to net cash, as per the calculations done by analysts at CLSA.

As on December 31, 2022, the company’s consolidated gross investments and cash and cash equivalents were Rs 16,482 crore as compared to Rs 17,807 crore at the end of September 2022.

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Total dividend announced by Hindustan Zinc for FY23 thus far stands at Rs 75.5 per share, implying a cash outflow of $3.9 billion (close to Rs 32,000 crore). “Following the fourth dividend, the company will turn net debt from net cash,” CLSA said in a note.

It has a ‘sell’ rating on the stock with a target price of Rs 260. The stock is trading a at a 6.7x one-year forward EV/EBITDA versus average of 6.5x since FY16.

Analysts at Investec have also noted that Hindustan Zinc has now utilised  over 90 percent of its free reserves. “Any incremental payout is at mercy of internal accruals and contribution of general reserves to the retained earnings,” it said, setting a ‘sell’ tag on the stock with a target price of Rs 270.

Investors cheered the fourth dividend payout announcement as the stock gained close to 4 percent after market opened on March 22. Shares of Vedanta which holds 64.9 percent stake in Hindustan Zinc, clocked minor gains of 0.5 percent in early trade.

Also Read: Hindustan Zinc approves fourth interim dividend of Rs 26 per share for FY23

Vedanta is now trying to sell its international zinc business to Hindustan Zinc, which is being opposed by the government. The Indian government is the largest minority shareholder in Hindustan Zinc with a 29.54 percent stake.

News agency Reuters recently reported, citing sources, that the Indian government may postpone plans to sell a portion of its ownership in the company, unless the acquisition is cancelled.

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