Hindustan Zinc shares have fallen sharply recently. In four days, the share price has fallen by nearly 21 per cent. The decline came after promoter Vedanta announced the sale of its stake in the company.

Current share position:

  • At 10:06 am, Hindustan Zinc shares were trading at ₹494.70, down nearly 5 per cent on the NSE. This price is close to the offer-for-sale (OFS) floor price of ₹486.
  • The offer-for-sale will be open for retail investors from August 19.

Offer-for-sale (OFS) details:

  • Vedanta, which is run by Anil Aggarwal, is selling 3.17 per cent stake in Hindustan Zinc from August 16-19.
  • The offer has a base sale of 1.22 per cent, while an additional 1.95 per cent stake can be sold if the offer is oversubscribed.
  • A total of 3.17 per cent stake is being sold at a floor price of ₹486 per share, which is at a discount to the August 13 closing price.
  • The total value of the offer is around ₹6,000 crore.

Vedanta’s plans and financials:

  • Vedanta also announced on August 16 that it will exercise the oversubscription option, which will include 1.21 crore additional shares, representing 0.29 per cent of the company’s total issued and paid-up equity share capital.
  • As of the end of the June quarter, Vedanta Ltd held a 64.92 per cent stake in Hindustan Zinc, while the government’s stake is 29.54 per cent.

Financial Status and Debt:

  • Vedanta’s stake sale is part of its efforts to manage its $2.5 billion debt.
  • Recently, Vedanta put on hold plans to sell the steel business and raised ₹8,500 crore through shares. The amount will be used to repay debt owed by Oaktree Capital, Deutsche Bank, and Union Bank of India.
  • As of the end of the June quarter, Hindustan Zinc’s debt stood at ₹11,178 crore, taking Vedanta Group’s total debt to ₹78,016 crore.
  • Hindustan Zinc announced plans for an interim dividend of ₹4,225 crore in May, aimed at helping reduce Vedanta’s debt.

This is a significant step towards debt management, and the efforts being made by Vedanta are crucial towards ensuring financial stability.