Vedanta to trim Hindustan Zinc stake via Rs 7,500 cr block deal amid capex push

Vedanta Ltd, the promoter of Hindustan Zinc Ltd, is set to divest shares valued at up to ₹7,500 crore through block deals, according to sources from CNBC Awaaz. The anticipated sale is likely to be at a discount of up to 10% from the last closing price.

DAM Capital and Citi are reportedly the brokers facilitating the transaction, which is expected to reach the market shortly. This strategic move comes as Hindustan Zinc's shares dropped by 5.26%, closing at Rs 485.95 on the NSE, reflecting a decrease of Rs 27 from the previous day.

In conjunction with the stake sale, Hindustan Zinc has announced its Board's approval for the initial phase of an ambitious plan to double its production capacity for zinc, lead, and silver. The company has approved the construction of a 250,000-tonne per annum integrated zinc metal complex in Debari, Rajasthan, complete with associated mining and milling infrastructure. This approval signals the company's commitment to expand its production capabilities significantly.

The expansion project is part of a larger Rs 12,000 crore capital expenditure plan. Hindustan Zinc aims to increase its integrated refined metal capacity by 250 kilotonnes per annum, along with corresponding enhancements in mining and milling capacity. The project is slated for completion within a 36-month timeframe, underscoring Hindustan Zinc's vigorous effort to boost capacity amid rising global demand.

Further highlighting the financial dynamics of the company, Vedanta Ltd, as Hindustan Zinc’s parent company, is set to benefit significantly from Hindustan Zinc’s latest interim dividend announcement. Hindustan Zinc declared an interim dividend of Rs 10 per share, representing a 500% payout based on its face value. Major shareholders like Vedanta Ltd stand to receive a substantial payout of approximately Rs 2,679.54 crore, with the Government of India also earning around Rs 1,180 crore from this dividend.

Hindustan Zinc, known for its consistent high dividend payouts, has paid Rs 19 per share in dividends over the last twelve months. The company's stock currently offers a dividend yield of 3.69%, as reported by Trendlyne market data. The latest dividend follows a previous payout with a record date in August 2024, highlighting the company's strong financial performance and shareholder return strategy.

Meanwhile, Vedanta Ltd’s shareholders are anticipating Wednesday's trading session as the company’s board is poised to consider its first interim dividend proposal for the current financial year. The proposed share sale by Vedanta is perceived as a strategic move to bolster liquidity, streamline operations, and address debt obligations, all while the company's capital expenditure initiatives with Hindustan Zinc move forward.