Hindustan Zinc Shares Tumble 7% Despite Rs 12,000 Cr Boost; Vedanta Block Deal Spooks Investors

Hindustan Zinc shares tumbled nearly 7% and touched the lower circuit on Wednesday amid high trading volume and volatility. Hindustan Zinc stock volatility was reportedly driven by Vedanta's share sale worth Rs 3018.20 crore through block deals, reported Business Today.

Hindustan Zinc on Tuesday announced capacity expansion plans worth Rs 12,000 crore to add a capacity of 250 kilo tonnes per annum (ktpa). The development has marked the first phase of its long-term target of increasing metal output in coming years.

Despite the capex push, Hindustan Zinc shares tanked nearly 7% on Wednesday. The company scrip touched an intraday low mark of Rs 455.35 apiece. The company scrip was trading 5.80% lower at Rs 458.2 per share on BSE on Wednesday at 11:40 am with a market capitalisation of Rs 1,93,625.24 crore.

Hindustan Zinc- Vedanta Block Deal

Hindustan Zinc shares suffered significant stock market volatility during the opening trading session on Wednesday. The Hindustan Zinc shares trading volume surged as high as 5255163 at 9:15 am on BSE. Nearly 4,81,097 Hindustan Zinc shares were sold on BSE, whereas 7,59,980 shares were bought on BSE till 11:40 am.

According to a Business Today report, Anil Agarwal-led Vedanta has sold shares worth Rs 3,018.20 crore through block deals. The Vedanta block deal is reportedly being done at a discount of up to 7% from the prevailing closing price.

The block deal floor price was fixed at Rs 452.50 per share against Hindustan Zinc's closing price of Rs 486.35 on NSE. As per BT report, the total offer size is reportedly at around 6.67 crore shares, which also includes 1.6% of the existing total outstanding shares.

Hindustan Zinc Expansion Plan

Hindustan Zinc's Board of Directors has approved the capacity expansion plans for its integrated refined metal capacity by 250 ktpa along with matching mines & mills capacity with an investment of Rs 12,000 crore, announced HZL on Tuesday.

HZL's capacity expansion fits well with its long-term growth target in India and abroad for next fve years. The new project has been approved by the board for an integrated smelter at Debari along with mines and mills expansion across the mines.

The project timeline is 36 months and is expected to be completed for Rs 12,000 crores. "We are excited to announce this 2x growth project towards doubling our capacity across zinc, lead and silver, which is strategically aligned with the country's expanding economic landscape, increasing demand opportunities and keeping country self-reliant for Zinc. By closely matching the pace of national growth, we are confident that this will create significant value for our stakeholders and drive long-term success," said Chief Executive Officer Arun Misra.

Motilal Oswal's Hindustan Zinc Share Price Target

Expressing optimism around Hindustan Zinc's capacity expansion plans, Motilal Oswal, in its June 18 report, noted that the company continues to focus on improving production with tight cost controls. The brokerage maintained a 'Buy' rating for Hindustan Zinc share with a target price of Rs 480 per share.

"We retain our earnings estimates for FY26-27E and expect HZL to maintain its focus on profitability. Additionally, the favorable pricing condition is likely to further support margins. At CMP, HZL trades at 8.5x FY27E EV/EBITDA, and we believe the current valuation prices in all positive factors. We reiterate our Neutral rating with a TP of INR480 (premised on 8.5x EV/EBITDA on FY27 estimates)," noted Motilal Oswal.

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