Hindustan Zinc Ltd, one of India’s leading metal producers, on June 11, 2025, announced a first interim dividend of ₹10 per share for the financial year 2025-26. Despite the announcement, the stock price fell over 2 percent to ₹520 on the BSE, bringing the company's market capitalisation down to ₹2.20 lakh crore.

Board Approves Interim Dividend of ₹10

The company, in an exchange filing, stated:

“We wish to inform you that the Board of Directors, through a resolution passed by circulation on Wednesday, June 11, 2025, at 12:56 PM, approved the first Interim Dividend of ₹10 per equity share, i.e., 500% on the face value of ₹2 per share, for FY2025-26.”

The record date for determining the eligibility for dividend payout has been fixed as June 17, 2025, and the company confirmed that dividend will be disbursed within the prescribed legal timelines.

This payout totals ₹4,225 crore, making it one of the significant interim dividend announcements this year. For comparison, Hindustan Zinc had declared a ₹19 dividend in August 2024, highlighting the company’s ongoing commitment to rewarding shareholders.

Financial Performance: FY25 Off to a Strong Start

Despite the stock reacting negatively, the financial fundamentals of Hindustan Zinc remain strong.

For the recent quarter:

• Revenue rose 20% YoY to ₹9,087 crore

• Net profit jumped 47% to ₹3,003 crore

• EBITDA increased 32% to ₹4,820 crore

• EBITDA margin expanded by 500 basis points to 53%

These numbers signal a robust operational performance backed by improved efficiency and cost control.

Shareholding Structure: Vedanta and Government as Key Beneficiaries

As of the March 2025 quarter, the shareholding pattern of Hindustan Zinc is as follows:

• Vedanta Ltd (Promoter): 63.42%

• Government of India: 27.92%

• Retail Investors: 2.48%

Given the large promoter and government holdings, the dividend translates into significant direct cash flows to these stakeholders. For instance, in FY24, Vedanta received ₹5,091 crore as dividends from Hindustan Zinc, showcasing the financial importance of Hindustan Zinc to Vedanta’s overall cash flow.

Market Reaction: Profit Taking or Cautious Sentiment?

Despite strong quarterly earnings and generous dividend distribution, Hindustan Zinc’s stock fell by 2.11% on the BSE, closing at ₹520.

Market analysts believe the decline may be driven by profit booking or concerns around commodity price volatility, particularly in zinc and silver prices, both of which directly influence Hindustan Zinc's performance.

Another factor could be dividend capture strategy commonly followed by short-term investors. Since the record date is June 17, there is often a price correction post-announcement, as traders who enter for the dividend tend to exit soon after.

Historical Dividend Track Record

Hindustan Zinc has maintained a strong dividend-paying record over the years:

• August 2024: ₹19 per share

• January 2024: ₹15.50 per share

• July 2023: ₹10 per share
  These consistent payouts underline the company’s stable cash generation capabilities and strong balance sheet.

Outlook: Dividend Strength with Commodity Headwinds?

Going ahead, Hindustan Zinc’s prospects remain linked to global metal demand, especially zinc and lead, and the supply chain environment for mining operations. While the strong dividend and financial performance show confidence in fundamentals, macroeconomic uncertainties and global price pressures could influence future quarters.

Brokerage houses are expected to update their targets based on this dividend payout and Q1 results shortly. Investors should watch:

• Commodity price trends

• Updates from Vedanta regarding stake monetisation

• Government decisions around PSU holdings

• Dividend policy consistency

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