Hindustan Zinc shares drop 8% as 2-day OFS by Vedanta kicks off today; here's why

Shares of Hindustan Zinc Ltd (HZL) fell 8 per cent in Friday's trade as the two-day offer for sale (OFS) by promoter Vedanta kicked off.  The floor price for the HZL offer was set at Rs 486 apiece, which was at 15.17 per cent discount to Wednesday's closing price of Rs 572.95 on BSE. Vedanta is looking to sell up to 3.17 per cent stake in Hindustan Zinc through an offer-for-sale (OFS) from August 16 to August 19.

Vedanta has proposed to sell up to 5,14,40,329 shares, representing 1.22 per cent of the total issued and paid up share capital of HZL on August 16, 2024 for non-retail investors only and on August 19 for retail investors. Non-retail investors who choose to carry forward their unallotted bids from Friday can also bid on Monday. Vedanta said it could additionally sell up to 8,23,04,527 shares, representing 1.95 per cent of the total issued and paid up share capital of HZL in the case of oversubscription. 

On Friday, HZL shares fell 7.8 per cent to hit a low of Rs 528 on BSE. Vedanta shares were up 1.39 per cent at Rs 425.90.

"In the event that the oversubscription Option is exercised, the equity shares forming part of the base offer size and the oversubscription option will represent 3.17 per cent of the total issued and paid up Equity Share capital of the company, i.e.13,37,44,856 equity shares," HZL said.

The offer is being undertaken by Vedanta to gain access to funds for inter alia growth and expansion purposes and for optimisation of the capital structure. 

Meanwhile, a PTI report suggested that Hindustan Zinc Ltd is looking to dole out a special dividend payout of Rs 8,000 crore to its shareholders in the ongoing financial year. The Hindustan Zinc board is likely to meet on Tuesday to consider and approve the special dividend payment for this fiscal, it quoted sources as saying. Apart from the government, the move would also benefit promoter Vedanta Ltd, which owns around 65 per cent stake in HZL, and would receive around Rs ,100 crore, which it may use to de-leverage balance sheet.