Vedanta board okays 2.6% OFS worth Rs 6,450 crore in Hindustan Zinc

Company to offload stake through the stock exchange route

In a surprise move, Anil Agarwal-promoted Vedanta Ltd said its board has approved an offer for sale (OFS) for its 2.6 per cent stake in Hindustan Zinc (HZL) through the stock exchange route.

In a statement to the exchanges, the company said, “The committee of directors of Vedanta has approved the sale of up to 110 million equity shares of Hindustan Zinc, representing 2.6 per cent.”

As of June, Vedanta had 64.92 per cent stake in Hindustan Zinc, and 29.54 per cent was held by the central government.

During Tuesday’s trade, Hindustan Zinc closed at Rs 586.35 per share on the BSE. At Tuesday’s share value, an OFS for 2.6 per cent stake would bring Vedanta around Rs 6,449 crore.

Vedanta’s decision comes as a surprise as the company, until recently, was in talks to persuade the Centre to call for an OFS in Hindustan Zinc.

Vedanta Ltd and its parent — Vedanta Resources — for the last couple of years have been attempting to deleverage their books.

In a more recent move, the India-listed entity raised Rs 8,500 crore through the qualified institutional placement (QIP) route. The company’s executives noted that this will be further instrumental in deleveraging the balance sheet and reducing finance cost.

As of June, Vedanta’s net debt was Rs 61,324 crore and gross debt stood at Rs 78,016 crore.

As of December 2023, Vedanta Resources gross debt was at $14.7 billion and net debt at $12.5 billion.

Vedanta Resources’ management has shared a guidance to reduce debt by $3 billion in the next three years.

Analysts with Nuvama — in an August 7 report — noted, “Parent (Vedanta Resources) has a debt (including interest of $420-430 million) obligation of Rs $1 billion in the remaining part of FY25. This can be met via dividend and brand fee.

This debt repayment does not include inter-corporate deposits of $417 million from Vedanta which needs to be paid by December.