Hindustan Zinc has tradition of declaring hefty interim dividend (no final dividend) with dividend of Rs. 16.50 paid for FY 20 in May 20 and Rs. 21.30 paid for FY21 in October 20. This is largely due to Govt holding 29.5% stake in the company, who rightly wants the company to distribute its large part of cash to the shareholders. It is also seen that such interim dividends in last 2 years were paid with consideration of quarterly results.
Market is expecting Hind Zinc to declare an interim dividend of Rs. 24 per share, while approving Q1 FY22 numbers, which will see distribution of Rs. 10,150 cr as dividend. Company was holding net cash of Rs. 15,130 cr, as at 31-3-21, which got raised to Rs. 17,500 cr by 30th June, 21. So, using 58% of net cash held by the company is not a bad idea.
Vedanta Ltd holding 65% stake in Hind Zinc, will get Rs. 6,600 crore of this expected dividend, which will also compel Vedanta Ltd to declare a dividend of about Rs.17.50 per share, to escape from tax liability, to avail benefits of Section 80M of Income Tax Act.
Can Q1 FY22 numbers cheer the shareholders?
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