Hindustan Zinc surges 7% as Co to raise up to Rs 4,000 crore through NCDs

Shares of Hindustan Zinc (HZL) rallied nearly 7 per cent to Rs 222.75 apiece on the BSE on Wednesday, a day after the company said its board-constituted panel has approved raising up to Rs 4,000 crore through debentures.

"The duly authorised committee of directors...considered and approved offering for subscription on a private placement basis, up to 40,000 unsecured, rated, listed, redeemable, non-convertible debentures (NCDs) of a face value Rs 10,00,000 each," the filing said.
 

It added that the fundraising would aggregate up to Rs 4,000 crore, including the option to retain oversubscription of up to Rs 1,000 crore. HZL is a subsidiary of Vedanta Ltd. Vedanta Ltd owns  64.9 per cent stake in the company, while the government holds a 29.5 per cent stake.

For the quarter ended June 2020, the company's standalone net profit dropped 23 per cent year-on-year (YoY) to Rs 1,359 crore on 20.83 per cent decrease in revenue to Rs 3,898 crore. 

Hindustan Zinc's fall in revenues was primarily due to 29 per cent YoY and 8 per cent sequential decline in Zinc LME prices, 11 per cent YoY and and 9 per cent sequential decline in lead LME prices, lower metal premium and Covid-19 impacted lower volume, partly offset by rupee depreciation. READ MORE

In a September 21 note, analysts at Edelweiss Securities said that the non-ferrous operating data for August shows that production is normalising across companies. The key takeaways, according to them, are a month-on-month (MoM) uptick in aluminium production across companies, fast normalisation of Hindalco’s copper production compared to Q1FY21; and sustenance of mined metal (MM) production at Vedanta’s Zinc-India division at 80 kilotonnes per month.

"We envisage Q2FY21 to be better for all non-ferrous companies as production has picked up and prices are higher," the brokerage said.