Vedanta to sell 2.6% stake in Hindustan Zinc, company board approves OFS

Anil Agarwal-controlled Vedanta Ltd said its board has approved an offer for sale (OFS) for its 2.6 per cent stake in Hindustan Zinc (HZL) through the stock exchange mechanism. In an official statement submitted to the stock exchanges, Vedanta announced that the committee of directors has approved the sale of a maximum of 11 crore equity shares of Hindustan Zinc, which accounts for 2.60 per cent of the company's shares.

This strategic move by Vedanta has caught many by surprise, considering the recent efforts made by the company to lobby the Central government for an Offer for Sale (OFS) in Hindustan Zinc. The OFS date has not been announced.

"We wish to inform you that the duly authorised Committee of Directors of Vedanta Limited, 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, 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," Vedanta said in a regulatory filing.

As of June, Vedanta held 64.92 per cent in Hindustan Zinc, with another 29.54 per cent stake in the company.

Hindustan Zinc recently announced a significant milestone by achieving positive profit growth in Q1 FY25 after experiencing six consecutive quarters of decline. This noteworthy achievement was attributed to surging prices and increasing demand in the market. The company reported a remarkable 19.4% year-on-year increase in net profit, totaling Rs 2,345 crore during the April-June quarter. Furthermore, the sale of zinc witnessed a substantial 14% year-on-year growth in the first quarter, establishing itself as the primary revenue-generating segment for Hindustan Zinc.

The market performance of Hindustan Zinc has also been noteworthy, with its shares experiencing an impressive 84 percent increase year-to-date, leading to a doubling of the company's market capitalization in the June quarter.

Furthermore, the company attained its highest-ever levels of mined and refined zinc production during the June quarter, highlighting its operational excellence and robust performance in the industry.