Hindustan Zinc OFS Review 2026: Vedanta to Offload ₹4,500 Cr Stake

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Vedanta Limited has announced a major Offer for Sale (OFS) to sell up to 1.59% of its stake in subsidiary Hindustan Zinc Limited (HZL). Capitalizing on the massive rally in silver prices that has propelled HZL shares to record highs, the parent company has set the floor price at ₹685 per share, offering a discount of approximately 5.7% to the closing price of ₹726.50 on January 27, 2026.

This report provides a deep dive into the OFS details, Hindustan Zinc’s financials, the “Silver Supercycle,” and whether this floor price offers a good entry point for investors.

Critical Dates & OFS Details

Event	Date / Details
Stock Symbol	HINDZINC (NSE/BSE)
OFS Open Date (Non-Retail)	Wednesday, January 28, 2026
OFS Open Date (Retail)	Thursday, January 29, 2026
Floor Price	₹685 per share
Discount to CMP	~5.7% (based on ₹726.50 closing)
Base Offer Size	0.79% (3.35 Crore shares)
Oversubscription Option	0.79% (Additional 3.35 Crore shares)
Total Stake on Offer	1.59% (Approx. 6.70 Crore shares)
Total Issue Value	Approx. ₹4,590 Crore

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Deep Dive: Hindustan Zinc OFS Analysis

1. The Context: Why is Vedanta Selling Now?

The timing of this Offer for Sale is strategic and precise. Hindustan Zinc shares have rallied over 60% in the last few months, driven largely by a global surge in silver prices, which recently crossed $100 per troy ounce. HZL is not just a Zinc miner; it is the 3rd largest silver producer globally.

For the parent company, Vedanta Limited, this OFS is a classic capital allocation move.

• Deleveraging: Vedanta has been systematically reducing its debt burden. Monetizing a small portion (1.59%) of its subsidiary at near all-time high valuations allows them to raise ~₹4,600 Crore cash immediately.
• Valuation Arbitrage: Selling when the subsidiary is trading at a P/E of ~26x (historically high for a mining stock) captures maximum value for Vedanta shareholders.

2. Financial Health: Q3 FY26 Performance

Investors looking at this OFS must look beyond the discount and analyze the underlying asset. Hindustan Zinc recently released its Q3 FY26 numbers (December 2025), and they are stellar.

• Revenue Growth: The company reported revenue of ₹11,298 Crore, a massive jump of 28% YoY.
• Profitability: Net Profit soared to ₹3,879 Crore, marking a 47% increase YoY.
• Operational Efficiency: EBITDA Margins expanded to 55%, up 300 basis points from last year. This demonstrates the company’s ability to control costs even as commodity prices fluctuate.
• Silver Contribution: The silver vertical is becoming the crown jewel. With silver prices hovering at record highs, the margin contribution from silver has likely overtaken zinc in terms of growth velocity.

3. Business Model Analysis

Hindustan Zinc operates on a low-cost, high-margin model.

• Zinc & Lead: They are the world’s 2nd largest integrated Zinc producer. Their mines in Rajasthan are world-class assets with long life (25+ years). Zinc demand is tied to infrastructure and steel (galvanization), making it a stable cash cow.
• Silver: This is the “Alpha” in the stock. As a byproduct of Zinc-Lead mining, the cost of production for silver is incredibly low. Any increase in silver prices flows almost directly to the bottom line.
• Power: The company has its own captive power plants, insulating it from grid volatility and keeping energy costs (a major expense in mining) under control.

4. SWOT Analysis

Strengths:

• Lowest Cost Producer: consistently in the first quartile of the global cost curve.
• Dividend History: Known for massive dividend payouts. Buying in OFS increases the effective yield.
• Silver Exposure: The best pure-play proxy for Silver in the Indian market.

Weaknesses:

• Cyclicality: Earnings are heavily dependent on LME (London Metal Exchange) prices. A crash in metal prices directly hits the bottom line.
• Parent Leverage: The parent company (Vedanta) has high debt, which often leads to pressure on HZL to pay out cash reserves as dividends, sometimes limiting CAPEX for future growth.

Opportunities:

• Renewable Energy Transition: Zinc is crucial for galvanizing solar structures; Silver is essential for solar panels. The green energy transition is a structural tailwind.
• Capacity Expansion: Ongoing expansion to 1.25 MTPA (Million Tonnes Per Annum) capacity.

Threats:

• Royalty Hikes: Government regulation on mining royalties can impact margins.
• Global Recession: A slowdown in China (the largest consumer of metals) would depress Zinc prices immediately.

5. Peer Comparison

Metric	Hindustan Zinc	Vedanta Ltd	Hindalco	NMDC
P/E Ratio	~26.0x	~18.5x	~14.2x	~11.5x
P/B Ratio	~8.5x	~2.8x	~1.9x	~2.5x
Dividend Yield	~3.5%	~4.5%	~1.0%	~5.0%
EBITDA Margin	55%	30%	16%	35%

Analysis: HZL trades at a premium valuation compared to peers like Hindalco and NMDC. This premium is justified by its higher margins (55% vs peer avg of 25%) and its unique exposure to Silver, which commands a higher multiple than ferrous metals.

6. Grey Market Premium (GMP) & Arbitrage

While OFS does not have a “Grey Market” in the same way an IPO does, the Floor Price Discount acts as the immediate arbitrage.

• Current Price: ₹726.50
• Floor Price: ₹685.00
• Spread: ₹41.50 (5.7%)

Historically, HZL share prices tend to correct towards the floor price during an OFS. However, given the strong Q3 results and the bullish silver sentiment, there is a high probability the stock will defend the ₹690-700 levels. Retail investors bidding at the “Cut-Off” price usually stand a good chance of allotment if the non-retail book isn’t overwhelmingly oversubscribed at the higher end.

7. Valuation & Final Verdict

At a floor price of ₹685, Hindustan Zinc is valued at approximately ₹2.9 Lakh Crore.

• The Bull Case: If you believe Silver is heading to $120+ and the global infrastructure push will continue, ₹685 is a steal. You are getting a high-dividend payer at a ~6% discount.
• The Bear Case: The stock has run up too fast (60% in 3 months). The OFS supply (6.7 crore shares) is large and will soak up liquidity, likely keeping the stock sideways or negative for weeks.

Investment Strategy:

For long-term investors, this OFS is a BUY. The combination of a 5.7% discount and the structural silver story makes it attractive. For short-term traders, caution is advised as the “OFS Overhang” may keep the price depressed near ₹690 for the next few trading sessions.

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FAQ Section

Q: What is the Floor Price for the Hindustan Zinc OFS?

A: The floor price has been set at ₹685 per share.

Q: Can Retail Investors apply on the first day?

A: No. Non-Retail investors (Institutions, HNIs) bid on January 28. Retail investors (bids up to ₹2 Lakhs) bid on January 29.

Q: Is there a retail discount?

A: No specific additional discount for retail has been announced; the floor price itself acts as the discount mechanism relative to the market price.

Q: How do I apply for the OFS?

A: You can apply through your stockbroker (Zerodha, Groww, Angel One, etc.) under the “OFS” or “Corporate Action” section. You do not apply through the IPO tab.

Q: What happens if I bid at the Cut-Off price?

A: Bidding at the “Cut-Off” indicates you are willing to buy at the final price discovered by the system. This gives you the highest chance of allotment but offers no price protection if the clearing price ends up higher than the floor price.

Q: Why is the stock falling after the OFS announcement?

A: It is common for stock prices to correct towards the OFS floor price. The influx of extra supply (liquidity) and the lower offer price naturally pull the market price down in the short term.

Hindustan Zinc OFS Review| Vedanta Limited| HINDZINC| Stock Market News| Dividend Stocks| Silver Rally| Zinc Prices| Offer For Sale| High Dividend Yield Stocks| Mining Sector Analysis

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by Mirae Asset (m,Stock)