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Hindustan Zinc shares rise 3.3% after dividend announcement

LiveMint logoLiveMint 23-03-2017 Ravindra N. Sonavane

Mumbai: Shares of Hindustan Zinc Ltd (HZL) rose 3.3% after the company announced a one-time interim dividend of 1,375% for the fiscal year 2016-17.

The stock touched a high of Rs322.10 a share. At 9.46am, the scrip was trading at Rs320.05 on the BSE, up 2.7% from its previous close, while India’s benchmark Sensex index rose 0.37% to 29,275.36 points. Its parent Vedanta Ltd rose 2.2%.

The company approved Rs27.50 a share which entails an outflow of Rs13,985 crore, including dividend distribution tax (DDT). Out of this, the dividend payout is Rs11,620 crore and DDT Rs2,365 crore. The record date will be on 30 March.

The government’s share will be Rs5,798 crore, out of which Rs3,433 crore is dividend and the rest DDT. The share of Vedanta Group, which holds 65% stake in the company, is Rs7,553 crore.

With this, the total dividend for this fiscal year comes at Rs27,157 crore, including special golden jubilee dividend of 1200% in April 2016 and interim dividend in October 2016. Of this, Rs11,259 crore will go to the government, which holds 29.54% stake in the company.

As of 30 September, HZL has cash of Rs25,166 crore on its books.

Also Read| Hindustan Zinc announces special dividend of 1,375% per equity share

Meanwhile, oil marketing companies Indian Oil Corp. Ltd (IOC), Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL) are also trading higher as their board will meet later on Thursday to consider interim dividend.

IOC rose 2%, BPCL 1.5% and HPCL gained 2.2%.

The government will use dividend from HZL to meet its fiscal deficit target of 3.5% of the gross domestic product in 2016-17 which has already exceeded its full-year target.

For April-January, fiscal deficit shot up to Rs5.64 trillion or 105.7% of the budget estimate, according to the Controller General Of Account website.

Analysts expect that the next step could be stake sale by the government in HZL, which will keep the scrip’s price under check.

Analysts also say that Vedanta Group likely to use the dividend amount for buying its rivals Anglo American Plc.’s 12% stake.

Earlier, Bloomberg reported that Anil Agarwal, chairman of Vedanta Resources Plc., plans to buy as much as $2.4 billion of Anglo American Plc. shares in the market after a merger proposal failed last year.

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