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Hindustan Zinc Limited, a subsidiary of Vedanta Limited, has witnessed a remarkable surge in its share prices, crossing the ₹800 mark on Wednesday. This upward trend has been consistent for the past six trading days, with the stock reaching an intraday high of ₹807.7 during Wednesday's trading session. The stock's performance has been impressive, gaining in eight out of the last nine trading sessions.
Analysts attribute this surge to the company's strong financial performance and its position as India's only listed silver play. In the 2024 financial year, silver contributed 19% to the company's overall topline. However, despite the positive momentum, concerns remain regarding the lack of free float available in the market.
Promoter Vedanta holds a significant 64.92% stake in Hindustan Zinc, with the government owning 29.54% and LIC holding 2.78%, effectively leaving retail shareholders with limited float. This concentration of shareholding among a few entities raises concerns about the liquidity and availability of shares for trading.
As of the March quarter shareholding, Hindustan Zinc had approximately 4.1 lakh retail shareholders with a nominal share capital of up to ₹2 lakh, representing only a 1.7% stake in the company. The remaining shares are distributed among foreign portfolio investors, mutual funds, and other entities.
Despite the stock's impressive gains, analysts remain cautious, with eight out of 12 analysts covering the stock issuing 'sell' recommendations. Investec's price target of ₹260 implies a potential downside of nearly 68% from Wednesday's high of ₹790. Investors are advised to carefully consider these analyst recommendations and the potential risks associated with investing in Hindustan Zinc shares.
Source: Hindustan Zinc shares have crossed the ₹800 mark, but there is a problem