Hindustan Zinc shares drop over 4.5% as Vedanta to sell 2.6% stake

Shares of Vedanta and its subsidiary Hindustan Zinc (HZL) were on investors' radar on Wednesday, August 14, as the mining giant announced on Tuesday that it will sell a 2.6% stake in HZL through an offer for sale (OFS).

In its regulatory filing, Vedanta said, "We wish to inform you that the duly authorized Committee of Directors of Vedanta Limited (“Committee”), 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 Limited (“HZL”), 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, in accordance with applicable laws and the circulars issued by the Securities and Exchange Board of India and the stock exchanges.

The meeting of the committee commenced at 4:30 p.m. and concluded at 4:45 p.m. on Tuesday.

At 11:33 AM, HZL shares were trading 4.58% lower at ₹553.95 on the BSE while Vedanta was trading nearly 2% lower at ₹414.95.

The market capitalisation of the Vedanta Group surged by over ₹2.2 lakh crore between March 28 and June 20, 2024, according to stock exchange data. This is higher than the market cap growth witnessed by leading Indian businesses like Reliance Industries, Mahindra Group, and Tata Group during the same period, as per a PTI report.

The rising conviction of investors in Vedanta Group was evident in the increasing shareholding of institutional buyers, as foreign institutional investors' holding in Vedanta rose to 8.77% at the end of the March quarter from 7.74% a quarter ago.

Adding to the positive is the strengthening of commodity prices, which, along with the accrual of benefits from most cost optimisation initiatives coming from FY25 onwards, is expected to support Vedanta's profitability, the PTI report said, quoting analysts.

On Tuesday, shares of Vedanta settled 1.65% lower at ₹424.95 apiece on the NSE, while HZL stock ended at ₹586, down 4.5%.

As of June, Vedanta had 64.92% stake in Hindustan Zinc, while 29.54% was held by the central government.

At Tuesday’s share price of ₹586, an OFS for 2.6% stake would bring Vedanta around ₹6,446 crore.