On Wednesday’s session, the large-cap stock declined 0.4 percent to Rs 299.6 its intraday low from its previous close of Rs300.80 After the company proposal of the corporate restructuring plan.
According to media reports, the board of directors of Hindustan Zinc Ltd (HZL) has initiated a corporate restructuring plan, which could delay the government’s bid to sell a portion of its 29.54 percent stake in the miner through an offer for sale (OFS) this fiscal.
A delay in the stake sale procedure could jeopardize the Center’s FY24 disinvestment target of Rs 51,000 crore.
The government’s 29.54 percent stake in Hindustan Zinc Ltd is worth Rs 37,532 crore at current prices. The government intends to reduce its stake in Hindustan Zinc Ltd in stages over time. The government’s plan to divest a portion of its stake in Hindustan Zinc Ltd through an OFS may be delayed for the second time in about a year.
The board’s decision is expected to have an impact on the government’s timeline for making an offer for Hindustan Zinc Ltd. In the absence of a clear roadmap and conviction in the company’s potential benefits, investors may be reluctant to invest in the OFS.
The government will make a final decision regarding the offer for sale based on the ruling of the board of Hindustan Zinc Ltd. The company has commissioned a study on the formation of separate entities, and the findings are expected to be shared with the board for consideration, including government nominees.
According to the company report, the net revenue decreased by 18 percent year over year, from Rs 8,127 crores in Q2FY23 to Rs 6,619 crores in Q2FY24. Their revenue dropped by 7 percent sequentially from Rs 7,111 crore in Q1FY24 to the current levels.
In addition, the company’s net profit dropped by 35.4 percent year over year, from Rs 2,680 crores in Q2FY23 to Rs 1,729 crores in Q2FY24. Their revenue decreased by 12 percent on a quarterly basis from Rs 1,964 crore in Q1FY24 to the current levels.
The company’s promoters hold a 65 percent stake in the company, with 1 percent owned by foreign institutional investors, 2 percent owned by the general public, and 32 percent owned by domestic institutional investors.
Hindustan Zinc, founded in 1966, has more than five decades of experience in zinc-led mining and smelting. The company is a subsidiary of Vedanta Limited, which owns 64.9 percent of it, with the Government of India owning the remaining 29.5 percent.
Written by Sriram KV
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