With more than 5 decades of operational history, Hindustan Zinc is the largest zinc-lead miner in India. Globally, it is the second-largest extractor. The company has a market share of 78% in the country’s primary zinc industry. Along with zinc mining, the company is also involved in producing silver. It stands sixth in line with the world’s largest silver producers.
The company’s shares were trading at ₹ 247.70 per share, down 0.64% on Friday. It has fallen 23% since the start of the year compared to a year-to-date decline of 11.60% in the benchmark NIFTY50 index. At the current levels, the stock trades barely above its 52-week low of ₹ 245.
The company is a subsidiary of Vedanta Limited as 64.9% of the stake is held by the Anil Agarwal-led enterprise. The government has 29.5% ownership of the company.
The government is about to invite bids for liquidating its stake in the company. An initial offer for sale will be made to sell a small portion of the stake. However, the government will slowly offload the balance stake to meet its fundraising plans for this year. It has in-principle approval from the Union Cabinet.
In response to this, Vedanta Ltd. has pledged its 5.77% stake in Hindustan Zinc to raise ₹ 8,000 crores. The company plans to use the funds to acquire an additional stake in the company from the government.
The company reported a year-on-year increase of 30% in its total income to ₹ 29,440 crores for the fiscal year ended 2022. For the same period, its net profit climbed by 21% to ₹ 9,630 crores.
Analysts at JP Morgan have noted that Zinc inventories have come down to multi-decade low levels signalling subdued demand ahead. On the back of this, analysts at domestic brokerages expect the company to benefit from the restocking as the demand will increase pushing Zinc prices higher.
JP Morgan has initiated an ‘overweight’ rating on the stock with a target price of ₹ 490 per share. This results in a whopping 99% upside for the stock.
Written By – Vikalp Mishra
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