Hindustan Zinc shares tumble over 6% after Rs 3,300 crore block deal; Vedanta may be trimming stake

Hindustan Zinc shares fell over 6% after a large block deal of 7.2 crore shares at a discounted price, possibly by promoter Vedanta. Vedanta holds a 63.42% stake, while the government owns over 25%.

Shares of Hindustan Zinc on Wednesday (June 18) took a sharp hit, falling over 6% to Rs 455.60 on the NSE. The drop came after a large block deal involving 7.2 crore shares—worth a whopping Rs 3,323 crore—changed hands at Rs 460 per share, sparking speculation that promoter Vedanta might be offloading part of its stake.

The deal was reportedly priced at a discount of up to 10% from the previous day's closing, with DAM Capital and Citi acting as lead managers.

Who owns Hindustan Zinc?

As of March 2024, Vedanta continues to hold a majority stake of 63.42% in Hindustan Zinc. The Government of India owns more than 25%, while LIC and foreign institutional investors account for most of the remaining shares. Retail investors, holding up to Rs 2 lakh in shares, make up just 2.5%—making the public float very limited.

Growth plans still intact despite market jitters

Even as the stock faced selling pressure, the company is staying focused on its long-term growth story. Hindustan Zinc's board has approved an ambitious plan to double its production capacity across zinc, lead, and silver.

The expansion, pegged at Rs 12,000 crore, includes increasing refined metal output by 250 kilotonnes per annum, along with parallel upgrades in mining and milling. The company aims to complete the project within 36 months.

Brokerage remains optimistic

Despite Wednesday's fall, market analysts aren't too worried. Brokerage firm JM Financial reiterated its bullish stance, maintaining a 'buy' rating with a price target of Rs 550—suggesting an upside of nearly 13% from current levels.

"We remain positive on HZL given its cost efficiency, high-quality captive mines, 100% captive power generation, and increasing silver revenues," the brokerage said in its note.