Vedanta Board Approves Sale of 2.6% Stake in Hindustan Zinc

In a surprising move, Vedanta Ltd, led by Anil Agarwal, has received board approval for an Offer For Sale (OFS) of its 2.6 per cent stake in Hindustan Zinc (HZL) through the stock exchange. The board has authorized the sale of up to 110 million equity shares of Hindustan Zinc, which represents this 2.6 per cent stake.

As of June, Vedanta held a 64.92 per cent stake in Hindustan Zinc, with the central government owning 29.54 per cent. On Tuesday, Hindustan Zinc’s shares closed at Rs 586.00 on the NSE. At this share price, the OFS would generate approximately Rs 6,450 crore for Vedanta.

This decision is unexpected as Vedanta had recently been working to convince the central government to initiate an OFS for Hindustan Zinc. For some time, both Vedanta Ltd and its parent company, Vedanta Resources, have been focused on reducing their debt.

Recently, Vedanta Ltd raised Rs 8,500 crore through a Qualified Institutional Placement (QIP) to aid in deleveraging its balance sheet and cutting finance costs. As of June, Vedanta’s net debt was Rs 61,324 crore, with gross debt at Rs 78,016 crore.

Globally, Vedanta Resources reported a gross debt of $14.7 billion and a net debt of $12.5 billion by December 2023. The company aims to reduce its debt by $3 billion over the next three years.

Analysts from Nuvama, in an August report, highlighted that Vedanta Resources has upcoming debt obligations of $1 billion for the remainder of FY25, which is expected to be covered through dividends and brand fees. This does not include $417 million in inter-corporate deposits due by December.