Vedanta Sets Rs 486 Floor Price for HZL Stake Sale, Eyes Rs 6,498 Crore

Vedanta, a mining conglomerate, plans to sell up to 3.31% of its stake in Hindustan Zinc Ltd (HZL) through an offer for sale (OFS) from August 16-19. The floor price is set at Rs 486 per share, as per a regulatory filing.

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Hindustan Zinc Ltd, in a separate filing, mentioned that Vedanta will offload up to 13.37 crore equity shares, representing 3.17% of the company's equity stake, during the OFS period. This sale aims to raise funds for growth and capital structure optimisation.

Offer Details and Financial Implications

The floor price of Rs 486 per share represents a discount of over 15% compared to Wednesday's closing price of Rs 572.95 on BSE. At this floor price, selling 3.17% of the stake will yield Rs 6,498 crore for Vedanta. If sold at Wednesday's closing price, it would garner Rs 7,663 crore.

On August 16, Vedanta Limited will sell up to 5,14,40,329 equity shares, representing 1.22% of HZL's equity share capital, exclusively to non-retail investors. An additional 8.23 crore shares, representing 1.95% equity, will be available for retail and non-retail investors on August 19 if there is oversubscription.

Strategic Moves and Financial Performance

The OFS will open on Friday for non-retail investors and on Monday for retail investors and non-retail investors who carry forward their unallotted bids. This strategic move is part of Vedanta's broader plan to demerge its various business segments into separate listed entities.

Vedanta's board had initially approved the sale of up to 11 crore shares or a 2.60% stake in HZL through the OFS. However, the company has now increased the offer size to offload up to 14 crore shares, representing a 3.31% stake.

Company's Financial Health

At the end of June quarter, Vedanta held a 64.92% stake in HZL while the government owned 29.54%. As of June 30, Vedanta's net debt stood at Rs 61,324 crore.

Vedanta reported a consolidated net profit rise of 36.5%, amounting to Rs 3,606 crore for the quarter ending June 2024. This is an increase from Rs 2,640 crore in the same period last year. The company's income also rose to Rs 36,698 crore from Rs 34,279 crore.

Recent Fundraising Efforts

Last month, Vedanta raised Rs 8,500 crore (over USD 1 billion) through a Qualified Institutions Placement (QIP) of 19.31 crore equity shares at an issue price of Rs 440 per share.

This demerger strategy aims to reduce refinancing risks and lessen reliance on dividends from Vedanta Resources Ltd.

The sale is expected to provide significant funds for Vedanta’s growth and expansion plans while optimising its capital structure.