- Hindustan Zinc shares surged over 5% on August 26 after the government clarified that it was not looking to sell a stake in the company at the moment, easing concerns over a potential offer for sale (OFS).
- Jefferies raised its target price on Hindustan Zinc to ₹750 from ₹660, retaining a 'Buy' rating, citing favorable zinc and silver prices.
- The stock climbed to ₹623 in morning trade on August 26, up 5.1 percent from its previous close of ₹592.60.
- DIPAM Secretary Arunish Chawla stated that the government was 'not looking at a stake sale in Hindustan Zinc at the moment'.
- Hindustan Zinc shares fell 1.89% on August 25 amid renewed expectations that the government could pare its holding through an OFS.
- Jefferies raised FY27-29E EPS estimates for Hindustan Zinc by 10-11 percent, reflecting the stronger commodity-price environment.
- Speculation about a government stake sale had gained momentum after the government launched an OFS in Hindustan Copper at a discounted price.
Hindustan Zinc shares jumped over 5% on August 26 after the government confirmed it was not planning to sell a stake, alleviating fears of an offer for sale (OFS). The stock rose to ₹623, up 5.1% from ₹592.60, following comments from DIPAM Secretary Arunish Chawla.4
The government currently holds 27.92% of Hindustan Zinc, while promoter Vedanta owns 60.71%. The clarification was significant as shares had previously fallen 1.89% amid speculation of a potential stake sale. Jefferies' bullish outlook further fueled the stock's rise, raising its target price to ₹750, indicating a 27% upside from the previous close.
Jefferies noted that spot zinc prices have increased by 15% since the June quarter, while silver prices have surged 23% from July lows. The brokerage expects these trends to enhance earnings for Hindustan Zinc, raising its FY27-FY29 earnings per share estimates by 10-11% to reflect the stronger commodity-price environment.
The report highlighted that zinc prices are supported by supply constraints and could see further increases, while silver prices are expected to rise amid persistent inflation and stable interest rates. Jefferies' analysis suggests that Hindustan Zinc is better positioned than Hindalco, which has seen a decrease in earnings estimates due to lower aluminum prices.
Overall, the positive sentiment surrounding Hindustan Zinc is bolstered by favorable market conditions for both zinc and silver, positioning the company for potential growth in the coming quarters.
“Jefferies raised FY27-29E EPS estimates by 10-11% for Hindustan Zinc, now 16-23% above consensus, and sees potential for a further 12% upgrade in FY28 EPS at spot prices. The government holds 27.92% in the company, and a 1.5% stake sale could have fetched ₹3,500-4,000 crore.”
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