Hindustan Zinc’s Bold Move to Unlock Hidden Value – Shares Soar!

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Hindustan Zinc Ltd (HZL) has announced its plans to create separate entities for its zinc, lead, silver, and recycling operations as part of a strategic move to unlock their inherent value. Additionally, the company intends to engage external advisors to conduct a comprehensive review of its corporate structure.

This strategic decision aligns with the actions taken by its parent company, Vedanta Ltd, which is also in the process of segregating its various commodity businesses into four distinct companies. Recently, Vedanta’s Chairman, Anil Agarwal, revealed the possibility of individually listing some or all of these businesses.

HZL’s Board of Directors has empowered a committee of directors to conduct a thorough assessment and recommend suitable options and alternatives. Following this announcement, Hindustan Zinc’s shares experienced a substantial surge of up to 5.5%, eventually closing the day’s trading with a 3% increase, reaching Rs 308.25 per share.

In a filing submitted to the stock exchange, HZL has outlined the strategic objectives established by its Board of Directors for embarking on this initiative:

  1. Unlocking value for all stakeholders.
  2. Establishing businesses that can fully leverage their unique market positions to achieve sustained long-term growth.
  3. Creating distinct investment profiles to attract a more extensive and diversified investor base.
  4. Accelerating progress toward sustainability goals, with a dedicated focus on converting waste into wealth, reducing emissions, and adhering to robust ESG (Environmental, Social, and Governance) practices.
  5. Implementing an appropriate capital structure and capital allocation policies tailored to the specific dynamics of each business.
  6. Sharpening the company’s focus on its core competencies and strategically realigning its resources.

Vedanta Resources, the UK-based parent company of Vedanta Ltd, has encountered difficulties in raising funds due to credit rating downgrades and concerns related to its debt obligations. Anil Agarwal had aimed to alleviate the group’s debt burden by having Hindustan Zinc, a subsidiary of Vedanta Ltd, acquire certain zinc assets from the parent company in a $2.98 billion deal. However, this proposal faced opposition from the Central government, which holds nearly 30% of Hindustan Zinc’s shares.

The Indian government is the largest minority stakeholder in Hindustan Zinc, with a 29.54% ownership, while Vedanta owns 64.9% of the company.

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