Shares of Hindustan Zinc (HZL), a subsidiary of Vedanta falls over 7% to open at Rs 520 on NSE on Wednesday after the central government revealed plans to sell up to a 2.5% stake in the mining giant.
The sale will take place through an offer for sale (OFS) and includes an option for oversubscription. HZL is a key player in integrated mining, producing zinc, lead, silver, and cadmium.
OFS Details and Pricing
The government set the floor price for the sale at Rs 505 per share, offering a nearly 10% discount to the current market price. The OFS will initially be open for non-retail investors on Wednesday, while retail investors will have the opportunity to bid on Thursday, November 7.
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The offer includes approximately 5.28 crore shares, amounting to 1.25% of HZL’s equity, with an additional oversubscription option for another 1.25%, allowing the government to raise up to Rs 5,900 crore through this sale.
Brokerages on Hindustan Zinc
JM Financial on Hindustan Zinc
JM Financial remains positive on Hindustan Zinc, emphasizing the company’s advantageous position in the lower end of the global cost curve, bolstered by its high-grade captive mines, which have reserves to meet production requirements for decades.
Additionally, HZL benefits from 100% captive power plants, substantial scale, and a diversified revenue stream, including an increasing contribution from silver sales. JM Financial has set a target price of Rs 540 for the stock.
Nuvama on Hindustan Zinc
According to Nuvama, Hindustan Zinc is expected to pay an additional dividend of Rs 11 per share in Q4 FY25, bringing the total dividend per share (DPS) for FY25 to Rs 40. Despite the high dividend payout, Nuvama forecasts that HZL’s net debt will rise to Rs 6,600 crore by the end of FY25.
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Nuvama maintained a “Reduce” rating on the stock,
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