Hindustan Zinc share sale postponed, suggests report

The government might postpone plans to sell its stake in Hindustan Zinc, until there is a turnaround in the industry's fortunes, a report suggested.  This is even as the government hopes to push through the long-delayed sale in the ongoing financial year, two government sources told Reuters.

To recall, the government had planned to sell about 5 per cent in Hindustan Zinc in FY23, but delayed the move as Hindustan Zinc's shares saw a steep fall after the miner said it would buy two of Vedanta's zinc subsidiaries.

The government is waiting for the share price to recover, an official told Reuters.

At 1.30 pm, shares of Hindustan Zinc were trading 0.35 per cent higher at Rs 321.30 on BSE. The stock has risen 7 per cent in the last one year compared with a 29 per cent surge in the BSE Metals index.

The Reuters report suggested that government plans to sell its 29 per cent stake in tranches, starting with the sale of about 5 per cent stake. Vedanta Group holds a 64.9 per cent stake in Hindustan Zinc.

"Merchant bankers have advised against a sale offer at the moment as institutional investors are presently not keen to invest in the metals sector," the official told Reuters. The advice came after road shows were conducted in June.

Reuters noted that International zinc prices have corrected 30 per cent in the last six months due to global macroeconomic uncertainties and weak demand recovery in China, rating agency ICRA said last month. The global consumption growth of aluminium, copper and zinc is expected to remain muted this year, it suggested.

Moreover, last week, the country's top court dismissed Vedanta's plea to push the government to divest its stake in Hindustan Zinc. The government opposed the deal, which ultimately lapsed a few months later, Reuters reported.

Even during roadshows in December, institutional or large investors told government officials they were not keen on picking up significant stakes in Hindustan Zinc, the second official told Reuters.

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