The buzz was created when a big player like Vedanta Metal and Mining Company announced it would disinvest some of its stake in Hindustan Zinc. It would take this step on August 13, 2024, when its board cleared a proposal to sell up to 11 crore shares. This would be 2.6% of Hindustan Zinc’s total equity in a public offer for sale (OFS) on the market.
Market Reaction to the Announcement
Even before the announcement, the Hindustan Zinc stock was already in confusion. This stock ended 4.57% lower at ₹586.35 on BSE. Shares of Vedanta also dropped 2% to ₹422.70. The market, for its part, responded the next day. On NSE, Hindustan Zinc slumped over 6% in opening trade to ₹530.
Otherwise, it shot up to ₹527.10 as well. Some buying at lower levels, however, helped the stock recover some of its losses. It had fallen as low as around ₹539.50 a share, or 6% below its previous close of ₹571.75. Vedanta had earlier revealed that its move to pare part of its stake in Hindustan Zinc aims to restructure the business.
It intends to demerge its aluminium, oil and gas, power, base metals, and iron and steel businesses into individual companies such that they would list on the bourses. This is expected to cut the dependency on taking new loans and adjust less with VRL (Vedanta Resources Ltd).
Also Read: Vedanta Ltd. (BSE) Plan to Split into Six Companies
Restructuring and Future Plans
Hindustan Zinc’s shares felt pressure, but Vedanta’s shares got a boost on August 14, 2024. The stock started at ₹426 per share on the NSE and climbed to a peak of ₹430.25 during the day, showing a 2.50% jump from its last closing price of ₹420.20 per share. Even with the ongoing shake-up and market ups and downs, Vedanta’s shares stayed in positive territory.
Vedanta’s recent money moves, like pulling in ₹8,500 crore through a Qualified Institutional Placement (QIP) of shares, show the company’s push to cut debt and tighten up its business. This QIP, which happened in July 2024, ranked as one of the biggest by an Indian company that year and caught the eye of big-time investors, proving they believe in Vedanta’s game plan.
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Also, Vedanta’s choice to hold off on selling its steel business, which includes Electrosteel Steels Ltd., shows that the company values paying down debt and running over selling assets. Vedanta bought this steel business in 2018 during bankruptcy proceedings. The company had planned to sell it off along with other non-essential assets.
However, the delay in these intentions indicates a re-orientation to improving and maybe expanding its already existing operations. While Vedanta consistently shifts the course of its future strategic directions, market analysts and stockholders will be alert to any effects on Vedanta and Hindustan Zinc’s share prices.
If their financial dealings go wrong, Vedanta might lose its market position and financial status because it has many debts, which must also be paid once they attain target revenues from its essential industries.
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