Shares of Hindustan Zinc Ltd. fell by 3.5% after touching a day’s high of Rs 572 on 14th August, following the company’s announcement on Tuesday to offload up to 11 crore shares, or 2.6% of its total equity, through an Offer for Sale.

At Hindustan Zinc’s current market price, the sale of shares is expected to bring in over Rs 6,400 crore for Vedanta. The date and price details of this Offer for Sale have not been disclosed yet.

The OFS price could be lower because Hindustan Zinc is trading at 13-14 times its projected FY2026 EBITDA, which is significantly higher than the typical sub-10 times EV/EBITDA valuation for metal companies.

Vedanta, holding a 64.92% stake in Hindustan Zinc, recently released some pledged shares by using Rs 8,500 crore raised through an institutional share sale (QIP).

The OFS may benefit Vedanta by providing substantial cash, which could be used to reduce debt, fund upcoming capex plans, or pay another dividend. Recently, Vedanta declared a dividend of Rs 4 per share after an earlier Rs 11 dividend this year.

For Hindustan Zinc, the offer for sale would double the company’s free float from 2.5% to over 5% once Vedanta offloads the shares.

Besides Vedanta’s 64.92% stake, Hindustan Zinc is owned 29.54% by the government, 2.76% by LIC, and only 0.06% by India’s mutual funds. Small shareholders, with authorized share capital under Rs 2 lakh, hold just 1.51% of the company, totalling 4.33 lakh shareholders as of the June quarter.

Vedanta and Vedanta Resources have pending debt obligations of $1.2 billion and $1 billion, respectively, due in the financial year 2025.

At 11:08 AM, the shares of Hindustan Zinc Ltd. were trading 3.62% lower at Rs 559 on NSE.

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