Hindustan Zinc Falls 7% After Vedanta's 3,300 Cr Block Deal

On Wednesday, Hindustan Zinc shares fell by around 6.9 percent touching a day’s low price of Rs. 452.50 after the promoter Vedanta Limited, which holds a 63.42 percent stake in Hindustan Zinc (HZL) as of March 2025, is expected to do a stake sale, which aims to offload shares worth up to Rs. 3,300 crore via block deals which is managed by DAM Capital and Citi. The shares are expected to be offered at a discount to the previous closing price. As per the CNBC TV18 report, the shares were sold at Rs. 460 per share of 7.2 crore shares, or a 1.71 percent stake worth around Rs. 3,323 crore through block deal.

This move is largely seen as an effort to generate liquidity for Vedanta Group as it seeks to streamline operations and address its debt obligations. This transaction comes at a time when Hindustan Zinc, the largest integrated producer of zinc and lead in India and among the top five silver producers globally, is looking to start on expansion and operational growth.

Recently, HZL’s board approved a major capital expansion plan with a Rs. 12,000 crore investment to establish a new 250 kilo tonnes per annum (KTPA) integrated zinc metal complex at Debari, Rajasthan. This project, which includes associated mining and milling capacities, marks the first phase of a broader strategy to nearly double the company’s metal production capacity by 2030. The expansion is expected to be completed within 36 months and will be funded through a mix of internal accruals and debt. It is strategically aligned with the surging domestic and global demand for zinc, lead, and silver, driven by robust infrastructure and steel consumption in India and abroad.

The company’s roadmap is not only focused on doubling overall metal output but also aims to raise silver production to 1,500 tonnes in the coming years. HZL, which already commands a 77 percent market share in India’s primary zinc segment and supplies to over 40 countries, is leveraging this expansion to maintain its leadership and ensure self-reliance for India in zinc production.

Financially, HZL delivered a stellar performance in FY25. The company’s revenue surged 18 percent year-on-year to Rs. 34,083 crore. EBITDA for the year rose 27.14 percent to Rs. 17,388 crore, with a margin of approximately 51 percent. Profit after tax (PAT) soared 33.43 percent to Rs. 10,353 crore. HZL also reported its lowest cost of production in four years at $1,052 per metric tonne, and its return on capital employed (RoCE) reached around 58 percent. The company generated strong free cash flow from operations (pre-capex) of Rs. 13,784 crore. HZL’s reserves and resources now stand at 29.6 million tonnes.

Looking ahead, HZL’s future plans are focused on its 2x growth strategy. The ongoing stake sale by Vedanta is likely to provide the necessary liquidity for the group’s restructuring while allowing HZL to pursue its aggressive growth and capacity improvement. Being a market leader, with an expansion plan roadmap and a focus on operational excellence, the company is poised for value creation.