Vedanta to Offload 2.6% Stake in Hindustan Zinc via OFS

Mining giant Vedanta Ltd announced on Tuesday that its board has approved the sale of up to 11 crore shares, representing a 2.60% stake in Hindustan Zinc, via an offer for sale (OFS). However, the company did not provide details about the floor price or the date of the OFS.

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Vedanta's Committee of Directors authorised the sale during a meeting held on August 13, 2024. The regulatory filing stated, "The duly authorised Committee of Directors of Vedanta Ltd Committee, 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 Ltd HZL, representing 2.60 per cent of the issued and paid-up equity share capital of HZL, by way of an offer for sale through the stock exchange mechanism."

Vedanta's Stake and Financial Performance

As of the end of June 2024, Vedanta held a 64.92% stake in Hindustan Zinc, while the government owned 29.54%. The company reported a significant rise in consolidated net profit for the quarter ending June 2024. Net profit increased by 36.5% to Rs 3,606 crore compared to Rs 2,640 crore in the same period last year.

The company's consolidated income also saw an increase during this period. It rose to Rs 36,698 crore from Rs 34,279 crore in the year-ago period. This information was disclosed in an exchange filing.

Demerger Plans and Debt Situation

Vedanta plans to demerge its aluminium, oil and gas, power, base metals, and iron and steel businesses into separate listed entities. This strategic move aims to mitigate refinancing risks and reduce dependence on dividends from Vedanta Resources Ltd (VRL). As of June 30, 2024, Vedanta's net debt stood at Rs 61,324 crore.

Last month, Vedanta successfully raised Rs 8,500 crore (over USD 1 billion) through a Qualified Institutions Placement (QIP) of 19.31 crore equity shares at an issue price of Rs 440 per share.

The company's financial strategies and restructuring plans are aimed at enhancing its operational efficiency and financial stability. The upcoming OFS is part of these broader efforts to streamline operations and manage debt effectively.

Vedanta's recent financial performance and strategic initiatives indicate a focused approach towards maintaining growth while addressing financial challenges. The market will be closely watching how these moves impact the company's overall standing in the industry.