Hindustan Zinc shares tumble 6%, Vedanta up on block deal; what stock analysts say on HZL

Shares of Hindustan Zinc Ltd (HZL) tumbled 5 per cent, while those of promoter Vedanta Ltd climbed 1 per cent, in Wednesday's trade as the latter likely sold shares worth crores in the former via block deals today. 

Vedanta was looking to selling shares worth Rs 3,018.20 crore through block deals. The stake sale was set at a discount of 7 per cent from the prevailing closing price. As per Business Today sources, the floor price was set at Rs 452.50 apiece against Hindustan Zinc's closing price of Rs 486.35 on NSE. The total offer size was 6.67 crore shares, comprising of 1.6 per cent of existing total outstanding shares. 

Shares of Hindustan Zinc tanked 4.93 per cent to open at Rs 462.40 apiece on BSE. It later fell 6.2 per cent to hit a low of Rs 456.25 per share. As per media reports, 7.2 cr shares or 1.71 per cent equity worth Rs 3,323 crore change hands at Rs 460.5 per share via block deal. Vedanta shares opened at Rs 463.60 apiece, up 1.02 per cent. 

Vedanta owned 2,67,95,48,419 shares or 63.42 per cent stake in HZL at the end of March quarter. DAM Capital and Citi are the brokers facilitating the transaction. 

Hindustan Zinc has received board approval for the first phase of its long-term strategy to double production capacity across zinc, lead, and silver. As part of this expansion, the company will set up a 250,000-tonne-per-annum integrated zinc metal complex in Debari, Rajasthan, complete with associated mining and milling infrastructure. The move marks a significant step in strengthening its production capabilities and reinforcing its position as a leader in the metals sector.

Analysts have largely welcomed the development, viewing it as a positive move for long-term growth.

JM FInancial remained positive on HZL given its presence in the lower end of the global cost curve facilitated by high grade captive mines sufficient to meet requirements for decades, 100 per cent captive power plants, sizeable scale, diversified revenue stream with increasing contribution from silver sales. This brokerage suggested a target of Rs 550 on the stock. 

“We view this as a positive step, as the new capex plan provides volume growth visibility—even though that materializes only from FY29 onwards,” said Nuvama Institutional Equities.

“The expected payback period is more than five years at peak capacity utilisation. While the announcement is a long-term growth enabler, near-term earnings remain sensitive to commodity price movements.”

Nuvama added that Hindustan Zinc is currently trading at 10.2x FY27E EV/EBITDA, and they continue to value the stock at 8x FY27E EV/Ebitda, maintaining an unchanged target price of ₹403.

Motilal Oswal Financial Services (MOFSL) echoed similar sentiment, saying the expansion aligns well with Hindustan Zinc's goal to double its capacity. The company remains focused on enhancing production efficiency and maintaining tight cost controls.

“We retain our earnings estimates for FY26–27 and expect HZL to remain focused on profitability. Favorable pricing conditions are likely to further support margins,” MOFSL stated.

The brokerage added that the stock trades at 8.5x FY27E EV/EBITDA, a valuation they believe already factors in most of the positives. As such, MOFSL reiterated its Neutral rating on the stock with a target price of ₹480, based on FY27 estimates.