500% Dividend: Vedanta-Led HindZinc Stock Turned Ex-Dividend For Rs 4,225.32 Crore Payout: BUY/SELL?

Hindustan Zinc, a metal giant Vedanta-backed subsidiary, has turned ex-dividend for its massive dividend payout of 500% on Wednesday. The stock broadly held a gaining spree on the ex-dividend day. Since its Q4FY24 result, the stock skyrocketed by a whopping 39% in a month, outperforming its many peers.

Hindustan Zinc Share Price:

At the time of writing, HZL shares traded at Rs 565.90 apiece, up by 1.2% with a market cap of Rs 2,39,110.80 crore on BSE. The stock rose to an intraday high of Rs 579.85 apiece in the early hours, which was near its 52-week high of Rs 285.00 apiece. Meanwhile, its 52-week low is at Rs 285 apiece.

In a month, the stock jumped by nearly 39%, while YTD, the stock is up by 77%.

Hindustan Zinc Dividend:

The company has announced an interim dividend of Rs 10 per share which is 500% on a face value of Rs 2 per share for FY25. The payout is Rs 4,225.32 Crore.

The record date for payment of the interim dividend was fixed on Wednesday, May 15, 2024, and the Interim Dividend shall be duly paid within the stipulated timelines as prescribed under law.

For FY24, the company paid dividends up to 1,150% amounting to Rs 23 per share. On the current price level, the dividend yield is 4.07%.

Hindustan Zinc Earnings:

In Q4FY24, Hindustan Zinc's revenue from operations during the quarter was Rs 7,549 Crore, up 3% q-o-q on account of better zinc volumes partly offset by lower lead & silver volumes, and lower metal prices. The revenue plunged by 11% y-o-y on account of significantly lower zinc & lead prices and lower lead volume, partly offset by increased zinc & silver volumes, silver prices and favourable exchange rates.

While Hindustan Zinc's net profit for the quarter stood at Rs 2,038 Crore, marginally up sequentially and down 21% y-o-y. FY24 net profit was at Rs 7,759 Crore, down 26% y-o-y, primarily on account of lower EBITDA partly offset by lower tax expense.

BUY/SELL Hindustan Zinc:

JM Financial said, "We remain positive on HZL given its presence in the lower end of the global cost curve facilitated by high-grade captive mines sufficient to meet requirements for decades, 100% captive power plants, sizeable scale, diversified revenue stream with increasing contribution from silver sales. Maintain BUY." However, the target price for Hindustan Zinc has been lowered to Rs 385.

Further, Motilal Oswal said, "The performance has been largely in line with our estimates. The company continues to focus on improving production with tight cost control. To account for lower CoP ahead and an improved demand outlook, we have increased our FY25/FY26 EBITDA estimates by 11%/10%."

Accordingly, Motilal's note said, "HZ currently trades at 7x FY26E EV/EBITDA and we believe all positive factors are priced in at the current levels. We reiterate our Neutral rating on the stock with a revised TP of INR370 (premised on 6.5x FY26E EV/EBITDA)."

Also, Phillip Capital in its note said, "Zinc prices have recovered meaningfully on demand recovery expectations in China, geopolitical scenario leading to some supply constraints. Silver prices have also rallied (we predicted this in our 3Q note) following rally in gold on delay of US rate cut expectations. Higher LME and silver is expected to help HZL replenish its cash reserves which was depleted considerably in the last couple of years which we expect to be distributed as dividend to shareholders." It added, given muted volume growth HZLs earnings is now largely a function of cost and realisations.

Lastly, Phillip's note said, "We have upgraded our LME Zinc and silver price forecast by 7% and 19% respectively to US$ 3,100/t and US$ 31/Oz and consequently our target price revised upward to Rs 390. Given the recent sharp run up in stock price, we maintain our Neutral call with positive bias on further rally in silver."

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.