Hindustan Zinc Plummets Another 6% as Vedanta Rushes to Cash In on Oversubscription

Hindustan Zinc Ltd shares declined by over 6% on Monday, following a 9% drop on Friday, as the second day of the ongoing offer for sale (OFS) by the promoter, Vedanta, commenced. The non-retail portion of the Hindustan Zinc OFS was oversubscribed by 580.93%, while, as of Monday, the retail portion was subscribed to 0.76%.

Hindustan Zinc share price fell by 6.01%, reaching a low of ₹488.65 on the BSE. This marks a 20% decline in the stock over the past four days. The drop is linked to the floor price for the HZL offer being set at ₹486 per share, which is 15.17% lower than Wednesday's closing price of ₹572.95. Meanwhile, shares of Vedanta saw a slight increase of 0.47%, trading at ₹430.95.

On Friday, Hindustan Zinc indicated that Vedanta intends to exercise the oversubscription option in the OFS to the extent of 1,21,65,562 equity shares, representing 0.29% of the company’s total issued and paid-up equity share capital. This is in addition to 5,14,40,329 equity shares, representing 1.22% of the total issued and paid-up share capital, which form part of the base offer size.

"Therefore, the total offer size could be up to 6,36,05,891 equity shares (representing 1.51% of the total issued and paid-up equity share capital of the company), with 63,60,590 equity shares, or 10% of the offer, reserved for allocation to retail investors on T+1 day, i.e., August 19, 2024, subject to the receipt of valid bids," Hindustan Zinc stated.

Vedanta had previously indicated that if the oversubscription option is exercised, the equity shares included in the base offer size and the oversubscription option will represent up to 3.17% of the company’s total issued and paid-up share capital, equivalent to 13,37,44,856 equity shares.

This offer by Vedanta is aimed at raising funds to support growth and expansion initiatives, as well as optimizing the capital structure.

Hindustan Zinc Ltd (HZL), a subsidiary of Vedanta Limited, is a metal and mining company specializing in the production of zinc, lead, silver, and sulphuric acid. The company manages several mining operations, including the Rampura Agucha Mine, Rajpura Dariba, Sindesar Khurd, Zawar, and Kayad mines. 

Additionally, HZL operates smelting facilities such as the Chanderiya Lead Zinc Smelter Complex, Dariba Smelting Complex, and Debari Zinc Smelter, all located in Rajasthan. The company also runs thermal captive power plants in Rajasthan with a generation capacity of 474 MW, along with facilities capable of producing 274 MW of wind power and 713 MW of green power. HZL's headquarters are situated in Udaipur, Rajasthan, India.