Vedanta subsidiary Hindustan Zinc share price jumps after THIS fundraise move worth ₹5000 crore

Mumbai, June 6, 2025 — Shares of Hindustan Zinc Ltd (HZL), a key subsidiary of metals and mining conglomerate Vedanta Ltd, surged over 4% in Thursday’s trading session after the company’s board greenlit a fundraise of up to ₹5,000 crore. The announcement, which comes amid Vedanta’s broader debt restructuring efforts, was met with optimism on Dalal Street, driving strong interest in the stock and lifting market sentiment in the metal sector.

Board Nod Spurs Investor Interest

In a filing to the stock exchanges, Hindustan Zinc said its board approved a proposal to raise funds through a mix of instruments including non-convertible debentures (NCDs), external commercial borrowings (ECBs), or other debt securities, in one or more tranches. The total fundraise will not exceed ₹5,000 crore.

“The Board of Directors at its meeting held on June 5, 2025, considered and approved the proposal to raise funds not exceeding ₹5,000 crore in one or more tranches,” the company said.

Following the announcement, HZL shares rose to an intraday high of ₹408.60 on the NSE, before settling around ₹401.10 — up 4.3% compared to the previous close.

Why the Fundraise Now?

Industry watchers suggest that the capital raise is strategically timed, likely aimed at bolstering working capital, refinancing existing debt, and supporting the company's ongoing capital expenditure plans. Hindustan Zinc is currently undertaking expansions in its smelting and mining capacities, with a focus on enhanced sustainability and digitization initiatives.

“The planned fundraise signals the company’s intent to strengthen its balance sheet and maintain liquidity during a period of large-scale investments,” said Rahul Shah, Senior VP – Equity Research at Motilal Oswal Financial Services. “HZL’s fundamentals remain solid, and the debt instrument route provides flexibility without immediate dilution of equity.”

Broader Context: Vedanta’s Debt Challenges

The move also gains significance in the context of Vedanta Ltd’s ongoing financial engineering. The parent company has been actively looking to deleverage its books, having undertaken a corporate simplification process and exploring various asset monetization routes, including partial stake sales in Hindustan Zinc.

While earlier attempts to divest the government’s residual 29.54% stake in HZL had stalled, Vedanta’s continued efforts to unlock value through its subsidiaries have kept the group in investor focus. The current fundraise by HZL could provide indirect relief to Vedanta’s balance sheet, especially if dividends or inter-company loans are structured accordingly.

Market Sentiment and Peer Movement

The positive sentiment extended across the metal and mining segment, with shares of Vedanta also registering a 2.1% gain intraday. Other players like NMDC and Coal India saw moderate upticks, buoyed by broader bullish cues in base metal prices globally.

The Nifty Metal index was up 1.4% for the day, outperforming the benchmark Nifty 50 which closed marginally higher by 0.2%.

Analyst Viewpoint

Market experts believe that Hindustan Zinc’s robust operating metrics make it a relatively safe bet for debt investors, and the capital raise could support further rerating of the stock.

“HZL enjoys high EBITDA margins, strong free cash flow generation, and a debt-free status as of FY24,” said Meera Bhatia, Metals & Mining Analyst at JM Financial. “This new fundraise is more of a proactive move to ensure liquidity for future capex and operational needs. It’s a positive sign for long-term investors.”

Investor Outlook

With zinc prices expected to remain stable amid tightening global supply, and India's infrastructure push driving demand for galvanized steel, Hindustan Zinc is well-positioned to capitalize on growth opportunities.

Retail and institutional investors alike have shown increased interest, particularly as the stock trades at an attractive valuation compared to historical multiples. Market participants are now watching for clarity on how the raised funds will be deployed and any potential guidance updates during the next earnings season.

The ₹5,000 crore fundraise approval has reinvigorated confidence in Hindustan Zinc’s strategic direction and financial planning. With Vedanta’s backing and strong industry fundamentals, HZL remains a key player in India’s metal sector — and investors appear to be taking note.