Vedanta has fixed the floor price for selling part of its stake in Hindustan Zinc at Rs 685 per share. The company plans to raise around Rs 4,600 crore through this offer for sale (OFS). The move comes as Vedanta works to strengthen its financial position.
The Hindustan Zinc OFS will open for big investors on January 28. Retail investors can participate on January 29. Vedanta aims to sell up to 1.6% stake in India’s largest zinc producer through this process.
| Item | Details |
|---|---|
| Floor Price | Rs 685 per share |
| Current Price (Jan 27) | Rs 726.50 |
| OFS Size | 6.7 crore shares |
The floor price represents a 6% discount to Hindustan Zinc’s closing price on Friday. At this price level, Vedanta expects to raise approximately Rs 4,589 crore. This stake sale will reduce Vedanta’s holding in Hindustan Zinc from 61.84% to 60.25%.
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Hindustan Zinc shares have performed strongly in recent months. The stock has gained over 61% in the past year, partly driven by rising silver prices. As India’s top silver producer, the company benefits from higher precious metal prices.
Investors are showing strong interest in this Hindustan Zinc OFS after the company reported excellent quarterly results. For the October-December period, Hindustan Zinc posted a 46.5% jump in net profit to Rs 3,879 crore. Revenue climbed 27.5% to Rs 10,922 crore, marking its highest-ever quarterly performance.
The government owns 27.92% of Hindustan Zinc. This stake comes from when the company was a state-run enterprise before Vedanta’s acquisition. The current OFS involves only Vedanta’s shares and doesn’t affect government holdings.
Market analysts suggest the Hindustan Zinc share price might see volatility during the OFS period. However, the company’s strong fundamentals continue to attract investor attention. With a market value exceeding Rs 3 lakh crore, Hindustan Zinc remains a key player in India’s metals sector.
Q: When can retail investors participate in the Hindustan Zinc OFS?
A: Retail investors can buy shares on January 29.
Q: What percentage stake is Vedanta selling?
A: Vedanta plans to sell up to 1.59% stake through this OFS.
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Silver production has become increasingly important for Hindustan Zinc’s revenue. The company produces refined silver with 99.9% purity, making it valuable for industrial and investment purposes. This diversification helps balance the company’s earnings beyond zinc and lead products.
Vedanta has sold shares in Hindustan Zinc twice before during the past two years. These stake sales help the parent company manage its debt obligations while maintaining majority control. Experts suggest more such stake sales might occur if market conditions remain favorable.
The OFS comes at a time when metal prices show strength across global markets. Zinc prices have remained stable while silver has seen increased demand. This economic environment creates favorable conditions for Vedanta’s stake sale in Hindustan Zinc.
Investors should note the Hindustan Zinc OFS follows standard market procedures. Non-retail investors get first access on Monday, with any leftover shares becoming available to retail participants on Tuesday. The process ensures fair allocation across investor categories.
Hindustan Zinc’s financial health appears robust. The company reported an impressive EBITDA margin of 55% last quarter. Lower production costs and efficient operations have contributed to these strong financial numbers.
Market watchers will monitor how this Hindustan Zinc OFS impacts the stock’s short-term performance. While the floor price discount might create initial pressure, the company’s long-term growth prospects remain intact given its leadership position in India’s metals industry.
As always, potential investors should consider their financial goals before participating in this Hindustan Zinc OFS. Consulting with certified advisors is recommended when making investment decisions involving such large offerings.
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