Hindustan Zinc share price declines 7.5% as OFS for 2.5% stake by government starts today

Stock Market Today: Hindustan Zinc share price declined more than 7% in the morning trade on Wednesday, November 6 as the offer for sale (OFS) of a 2.5% stake by the government kicked off today. The floor price set by the government is nearly 10% lower than the previous close.

Hindustan Zinc share price opened at ₹520.85 on the BSE on Thursday, almost 7% lower than the previous closing price of ₹559.45. Hindustan Zinc share price thereafter dipped further to ₹515.90, losing more than 7.5% against its last close.

The Government of India (GoI) is selling a 2.5% stake through the offer for sale, the floor price for which has been set at ₹505, which is almost 10% lower than the closing price of Hindustan Zinc shares of ₹559.75 on Tuesday.

The Government has proposed to divest 5.28 crore shares with a face value of ₹2 each (1.25% equity), representing a 1.25% stake, with an equivalent amount available as a green shoe option, the company informed on Tuesday, November 5.

The OFS in Hindustan Zinc Limited has opened today for non-retail investors. Retail investors can bid for the OFS on Thursday, November 7.

The government is likely to fetch more than ₹5,000 crore through the stake sale.

In Q2 of FY25, Hindustan Zinc's mined metal production stood at 256 kt, up 2% year-on-year (YoY) while refined metal production was at 262 kt, up 8% YoY and flat sequentially.

Zinc's cost of production declined 6% YoY and 3% sequentially to $1,071 a tonne on account of higher volume and better acid realisations. Other factors include better linkage to coal availability, operational efficiencies and softened coal and input commodity prices.

Revenue for Hindustan Zinc during Q2 was up 22% YoY on account of better metal and silver volumes and zinc and silver prices. A strong dollar also supported revenue growth though it was marginally offset by lower lead prices. 

Earnings before interest, tax, depreciation, and amortisation (EBITDA) grew 33% YoY and 6% sequentially in line with the revenue from operations and supported by the lower cost of production. Consolidated net profit thereby also increased 38% YoY and 2% sequentially.

Analysts at Motilal Oswal Financial Services said that the performance was largely in line with their estimates. The company continues to focus on improving production with tight cost control. MOFSL has retained the earnings estimates and expects Hindustan Zinc to maintain its focus on profitability.

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