Hindustan Zinc (HZL) shares fell by 7.8%, hitting a low of Rs 528 on Friday after Vedanta, the company’s promoter, opened its offer for sale (OFS) at a discounted price of Rs 486. Vedanta is selling up to 3.31% of its stake, or 14 crore shares, from August 16-19.
Vedanta’s shares, which are expected to raise around Rs 6,498 crore from the sale, were trading 2% higher at Rs 430 on the BSE.
On Friday, Vedanta began selling 5.14 crore shares, representing 1.22% of HZL’s equity, to non-retail investors. If there’s more demand, the remaining 8.23 crore shares (1.95%) will be available to both retail and non-retail investors on Monday, August 19.
Vedanta stated that the sale is being conducted to raise funds for growth, expansion, and improving the company’s capital structure.
As of the end of June, Vedanta owned 64.92% of HZL, while the government held 29.54%. Vedanta is planning to split its aluminium, oil and gas, power, base metals, and iron and steel businesses into separate listed companies. This move is aimed at reducing financial risks and dependence on dividends from Vedanta Resources Ltd.
As of June 30, 2024, Vedanta had a net debt of Rs 61,324 crore. Last month, the company raised Rs 8,500 crore through a Qualified Institutions Placement (QIP) at Rs 440 per share. HZL is also expected to announce a special dividend of Rs 6,000 crore this month, and the National Company Law Tribunal (NCLT) recently approved the transfer of Rs 10,383 crore from HZL’s general reserves to retained earnings.
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