Vedanta Arm Hindustan Zinc Announces Rs 5,000 Crore OFS, Govt To Offload 2.5% Stake; Check Dates

The Indian government is set to divest up to 2.5% of its stake in Hindustan Zinc Limited (HZL) through an offer for sale (OFS) at a floor price of Rs 505 per share. This stake sale is expected to generate over Rs 5,000 crore at the floor price and will open for institutional bidders on November 6, 2024, followed by retail investors on November 7, 2024.

OFS Details and Pricing
According to Tuhin Kanta Pandey, Secretary of the Department of Investment and Public Asset Management (DIPAM), the government plans to sell over 5.28 crore shares, which amounts to a 1.25% equity stake in Hindustan Zinc, along with an additional 1.25% as a greenshoe option. The floor price of Rs 505 represents a 9.7% discount compared to the closing price of Rs 559.45 per share observed on November 5, 2024. Notably, shares of Hindustan Zinc saw a rise of 2.99% on the Bombay Stock Exchange (BSE) prior to the OFS announcement.

The previous OFS was discussed back in August 2024, when Vedanta, the parent company of Hindustan Zinc, announced its board's approval to sell up to 11 crore shares, or a 2.6% equity stake. However, specific dates for the subscription were not provided at that time.

Hindustan Zinc has shown robust financial performance in its recent quarterly results. For the July-September quarter of FY25, the company reported a consolidated profit of Rs 2,327 crore, reflecting a substantial 35% increase year-on-year. This growth can be attributed to improved product prices and a reduction in electricity costs due to a shift towards renewable energy sources. The company's revenue from its zinc and lead division rose to Rs 6,403 crore, compared to Rs 5,259 crore during the same period last year, while its silver segment also performed well, generating Rs 1,550 crore in revenue, up from Rs 1,297 crore in the previous year.

Furthermore, Hindustan Zinc has been proactive in enhancing its sustainability efforts, as evidenced by its investment of Rs 327 crore for a minimum 26% stake in Serentica Renewables, a co-group firm.

The impending OFS is likely to attract considerable attention from both institutional and retail investors, especially given Hindustan Zinc's strong market positioning as India's largest producer of zinc, lead, and silver. The anticipated influx of capital from the OFS could further enhance the company's operational capabilities and sustainability initiatives.