Vedanta to offload 2.6% stake in Hindustan Zinc via offer for sale; details here

Metals and mining major Vedanta announced on Tuesday that its board of directors has given the nod for the sale of up to 11 crore shares or 2.6 per cent equity in Hindustan Zinc, through an offer for sale (OFS).

"We wish to inform you that the duly authorised Committee of Directors of Vedanta Limited, at its meeting held today on August 13, 2024, has approved the sale of up to 11,00,00,000 equity shares of Hindustan Zinc, representing 2.60% of the issued and paid-up equity share capital of HZL, by way of an offer for sale through the stock exchange mechanism," the company said in an exchange filing.

However, the company is yet to announce the dates for the offer for sale.

At the end of the June, Vedanta held a 64.92 per cent stake in Hindustan Zinc, while the government owned 29.54 per cent.

Before the announcement, Hindustan Zinc's shares closed 4.57 per cent lower at ₹586.35 on the BSE, while Vedanta's shares also fell by more than 2 per cent, ending at ₹422.70 on the BSE.

Furthermore, the mining major is planning to separate its aluminium, oil and gas, power, base metals, and iron and steel businesses into distinct publicly traded companies. This restructuring is designed to minimize refinancing risks and decrease dependence on dividends from Vedanta Resources Ltd (VRL).

According to a Bloomberg report, Vedanta has been planning to raise $2.5 billion to help decrease the group's debt. The company has recently paused its plans to sell its steel business, as sources informed the news agency, following the successful raising of ₹8,500 crore through a Qualified Institutional Placement (QIP) of shares.

Hindustan Zinc Q1 results

Few days ago, Hindustan Zinc reported its first profit growth after six quarters of decline, driven by higher prices and increasing demand. For the April-June quarter, net profit surged by 19.4 per cent year-on-year to ₹2,345 crore, while zinc sales saw a 14 per cent year-on-year increase in the first quarter, becoming the company's leading business segment.

The company achieved its highest-ever production of both mined and refined zinc during the June quarter.

"Our aluminium and zinc divisions continue to outperform industry benchmarks, consistently ranking in the top quartiles and deciles of the global cost curve. These achievements are a direct result of our strategic focus on cost, as reflected in a 20 per cent year-over-year reduction in overall Cost," Arun Misra, ED, Vedanta Limited was quoted as saying during the June quarter earnings.