Vedanta has announced its intention to exercise the oversubscription option for the ongoing sale of shares in Hindustan Zinc, marking a significant development in the divestment process. The company has confirmed that the total offer size will extend up to 4,75,77,066 shares.

Share Sale Details

The announcement indicates Vedanta's strategic decision to utilize the oversubscription mechanism, which typically allows sellers to increase the offer size beyond the base amount based on investor response and market demand.

Corporate Action Significance

The oversubscription feature in share sales provides flexibility to the selling entity to accommodate higher investor interest. This mechanism is commonly employed in large-scale divestments to optimize the transaction size based on market reception.

Market Implications

The decision to exercise the oversubscription option suggests that Vedanta is positioning itself to maximize the divestment opportunity in Hindustan Zinc. The substantial number of shares involved in the offer indicates the significant scale of this corporate transaction.

This development forms part of Vedanta's broader corporate strategy regarding its shareholding in Hindustan Zinc, one of India's leading zinc mining companies.

Shares of Hindustan Zinc surged over 4% on Monday, reaching an intraday high of ₹663.00 after international brokerage HSBC upgraded the stock to Buy from Hold and set a target price of ₹750.00 per share. The upgrade, which implies an 18% upside potential, comes ahead of the company's Q3 earnings announcement. HSBC's revised outlook reflects improved metal price forecasts and stronger fundamentals across the metals sector.

HSBC's Upgraded Forecasts Drive Hindustan Zinc Rating

HSBC incorporated updated LME zinc and silver price forecasts into its analysis, raising FY2026-28 assumptions by approximately 5% to 23%. This revision led to a substantial 12% to 20% increase in EBITDA estimates for FY2027-28. The brokerage now values Hindustan Zinc at 11x FY27E EV/EBITDA, up from the previous 9.5x multiple.

The new valuation places Hindustan Zinc at the higher end of its five-year trading range of 5x to 11x EV/EBITDA. HSBC noted that this premium valuation reflects the company's strong balance sheet and a stable-to-improving outlook for LME zinc and silver prices. The brokerage highlighted further earnings upside potential from current spot LME zinc and silver prices.

Target Price Increases for Hindalco and NALCO

Alongside Hindustan Zinc, HSBC raised target prices for two other metal stocks. For Hindalco, the brokerage increased the target price to ₹1,240.00 from ₹1,060.00, implying a 33% upside potential. The revision follows EBITDA estimate increases of approximately 7% to 10% for FY2027-28.

HSBC factored in higher global LME aluminium and copper price forecasts for Hindalco, increasing FY2026-28 aluminium assumptions by about 5% to 16% and copper forecasts by around 5% to 20%. This drove the approximately 17% upgrade in the target price. The India business maintains a 7x FY27E EV/EBITDA valuation, representing a slight premium to its long-term average given the strong aluminium price outlook.

NALCO Benefits from Operational Improvements

For NALCO, HSBC raised the target price to ₹420.00 from ₹373.00, implying 16% upside, after increasing EBITDA estimates by around 16% for FY2027-28. The upgrade incorporates updated global LME aluminium and alumina price forecasts. The brokerage values NALCO at 7x FY27E EV/EBITDA, supported by its strong balance sheet and stable-to-improving aluminium price outlook.

HSBC highlighted improvements in NALCO's operating model, including:

• Start of captive coal mining operations
• Expected commencement of new captive bauxite mine
• Limited downside risk to alumina prices at current levels

Commodity Outlook and Market Performance

HSBC's optimistic stance reflects expectations of tight aluminium supply conditions, where any pickup in demand is likely to push prices higher. The brokerage raised its CY2026 and CY2027 LME aluminium price assumptions by around 16% and 14% to $3,200.00 per tonne and $3,250.00 per tonne, respectively, from previous forecasts of $2,750.00 and $2,850.00 per tonne.

The brokerage expects safe-haven metals and those with high exposure to energy-transition demand to continue outperforming metals with traditional demand exposure. HSBC has raised price forecasts for most metals on expectations of resilient demand, constrained supply, and a weaker US dollar, with platinum, copper, rhodium, and now aluminium as preferred metals.

In Monday's trading session, the upgraded stocks responded positively to HSBC's recommendations. Hindustan Zinc shares rallied over 4% to ₹663.00, Hindalco rose over 1% to ₹947.00, while NALCO gained nearly 2% to ₹376.00 on the BSE.