Hindustan Zinc Plummets 8% as Discounted 3.2% Stake Floods the Market

On August 16, shares of Hindustan Zinc dropped nearly 8% during early trading as the offer-for-sale (OFS) by promoter Vedanta Ltd, aiming to divest a 3.17% stake in the company, became available for subscription.

The OFS, open from August 16-19, includes a base offer of 1.22%, with the option to increase the sale by an additional 1.95% if there's strong demand. The total 3.17% stake is being offered at a floor price of ₹486 per share, which represents a 15% discount from Hindustan Zinc's previous closing price.

As of 09:25 am IST, Hindustan Zinc share price were trading at ₹534.75 on the NSE, while Vedanta share price had risen by nearly 2%, reaching ₹427.40.

The offer is available to non-retail investors starting August 16 and will open to retail investors on August 19. Initially, Vedanta had planned to offload a 2.6% stake as of August 13, but the offering was updated to 3.17%.

Hindustan Zinc's latest shareholding data shows that the government holds a 29.54% stake, while Vedanta owns 64.92%.

This stake sale by Vedanta follows a Bloomberg report detailing the company's strategy to raise $2.5 billion to manage its significant debt load. The report also mentioned that Vedanta recently halted plans to sell its steel business after raising ₹8,500 crore through a Qualified Institutional Placement (QIP) of shares.

In July, Moneycontrol reported that Vedanta, led by Anil Agarwal, intends to use the QIP proceeds to pay down its debts to Oaktree Capital, Deutsche Bank, and Union Bank of India.

As of the end of the June quarter, Hindustan Zinc reported a debt of ₹11,178 crore, bringing Vedanta Group's total consolidated debt to ₹78,016 crore. In May, Hindustan Zinc announced plans to distribute ₹4,225 crore in interim dividends, a move aimed at aiding Vedanta's efforts to reduce debt.

Additionally, a PTI report citing sources mentioned that Hindustan Zinc is considering issuing a special dividend of ₹8,000 crore to its shareholders for the current fiscal year. A board meeting is scheduled for August 20 to finalize the approval of this special dividend.