Vedanta vs Hindustan Zinc Ltd: Which stock fits your portfolio better?

Did you know that the metal industry in India has a significant role in mining the country’s future? Yes, the industry is booming, and the mining GDP has increased from ₹647.73 billion in the second quarter of FY 2023 to ₹712.29 billion in the second quarter of FY 2024.

Given the various reforms and new policies, the metal industry is an attractive space for investors. In today’s blog, we will analyse the two well-known names in this space including the share prices and financial reports of Vedanta Ltd and Hindustan Zinc Ltd. Do you know another unique fact about these two firms? Hindustan Zinc is Vedanta’s subsidiary, and they are both independently listed on the stock exchange. 

Also read: https://www.stockgro.club/blogs/personal-finance/esg-a-new-formula-for-investing-success/

Vedanta Limited

A leading group of natural resources and technology across the globe, Vedanta Limited is an Indian multinational mining firm with its headquarters in Mumbai.

History

Founded as Sterlite Industries by D.P. Agarwal in 1975, the firm began its operations by buying licenses for mining in different states. The current Non-Executive Chairman, Anil Agarwal, left for Mumbai when he was 19 to expand the business there. 

Sterlite began bidding for companies in government auctions, and in 2001, the firm acquired 51% of BALCO (Bharat Aluminium Company Ltd). In 2002, the firm acquired a 26% stake in Hindustan Zinc Ltd, which has increased to 64.9%. The firm acquired many such companies and has over ten firms in its subsidiaries list today.

In 2003, Sterlite was the first Indian company to be listed on the London Stock Exchange. 

In 2013, the firm changed its name to Vedanta Limited and has been operating under the same brand ever since.

Vedanta Limited today: Latest news and growth strategy

Today, Vedanta Limited is the largest producer of zinc, lead and silver, aluminium, iron ore, oil & gas, and ferrochrome in India. The firm acquired Nicomet in 2021, which is currently the only producer of Nickel in India.

With a mission to be a leading global natural resources company, Vedanta Limited has already carved a market leader position for itself in India’s natural resource sector. The firm also focuses immensely on ESG (Environmental, Social, and Governance) and is on its way to bringing carbon emissions to zero by 2050.

Vedanta’s growth strategy covers five main aspects:

• Operate the business responsibly and prioritise ESG by focusing on zero harm, zero discharge and zero waste.
• Maintain and expand their reserves and resource base.
• Maintain a clean balance sheet by aiming at strong cashflows and investing in projects with high profitability.
• Grow organically by exploring more brownfield opportunities.
• Improving digital and technological solutions to enhance overall operational efficiency.

Last year, Mr Anil Agarwal spoke about investing $1.7 billion towards growth projects and expanding the existing capacities at Vedanta.

Vedanta Limited’s share price history

Vedanta Limited is listed on both NSE and BSE. As of April 10, 2024, Vedanta Limited’s share price on NSE was ₹361.20 with a market capitalisation of ₹1,25,641 crores. The shares were trading at ₹275.60 on April 12, 2023, and the prices have risen by about 31.06% in the past year.

Vedanta’s shares reached an all-time high of ₹495 in 2022, but the prices fell later. The current share price is its highest in the past two years, and this is an effect of CLSA, a Hong Kong-based stock research firm’s revision of Vedanta’s share price target. The firm has moved Vedanta from an ‘underperforming’ stock to a ‘buy’ stock and has revised Vedanta’s share price target from ₹260 to ₹390.

Hindustan Zinc Ltd

Part of the Vedanta Group, Hindustan Zinc is a leading producer of zinc, lead and silver.

Also read: https://www.stockgro.club/blogs/trending/iron-and-steel-industry-in-india/

History

Established in 1966 by the Metal Corporation of India, Hindustan Zinc Ltd began its operations as a Public Sector Undertaking (PSU). However, the firm was loss-making and was put up for sale under the government’s disinvestment program.

In 2002, Vedanta Limited, then Sterlite, bought a 26% stake in Hindustan Zinc. Vedanta later bought 20% from the public and another 18% from the government as part of exercising a call option. 

Hindustan Zinc today: Latest news and growth strategy

Today, Hindustan Zinc operates as a direct subsidiary of Vedanta Limited. While Vedanta holds 64.92%, the government of India holds the remaining 35.08% stake in Hindustan Zinc.

Hindustan Zinc is now the largest producer of Zinc in India and second largest globally. The firm’s mine life is over 25 years, and it currently has reserves and resources of 460.1 million tonnes. Hindustan Zinc has over 80% market share in India’s zinc industry, and the firm is also the fifth-largest producer of silver globally, with an annual capacity of 800 million tonnes.

Hindustan Zinc, like its parent company, has five focus areas for its growth:

• Expanding production capacities
• Maintaining a portfolio of mines with long lives
• Focus on cost leadership
• Expanding product portfolio to meet customer needs
• Prioritising sustainability

In a recent interview, Arun Misra, the CEO of Hindustan Zinc, spoke about the company going through an organisational restructuring as a part of its growth strategy. This is a step towards creating different entities for different products to improve the focus and broaden the base for investors. He also spoke about Hindustan Zinc facing industrial challenges by focusing more on domestic customers and restricting exports to profitable categories.

Hindustan Zinc’s share price history

Hindustan Zinc Limited’s shares are listed on both NSE and BSE. As of April 10, 2024, Hindustan Zinc Ltd’s share price on NSE was ₹400.20 with a market capitalisation of ₹1,68,337 crores. The shares were trading at ₹313.25 on April 12, 2023, and the prices have risen by about 27% in the past year.

As per Hindustan Zinc’s share news, the price has risen over 19% in the last five days and has also hit an all-time high of ₹414.50 on April 10, 2024, on the back of rising metal prices.

Vedanta vs Hindustan Zinc: Financials

Which stock should you invest in?

• According to Vedanta’s financials and that of Hindustan Zinc, the companies have been profitable so far.
• Vedanta’s share rates are not much different from that of Hindustan Zinc. Both of them have seen about 30% rise in the past year. 
• Vedanta’s share dividend for FY 2023 was ₹101.50. According to Vedanta’s share dividend history, the firm has paid ₹101.50, ₹45 and ₹9.50 in the last three financial years. Hindustan Zinc’s share dividend for FY 2023 was ₹75.50. According to Hindustan Zinc’s share dividend history, the firm has paid ₹75.50, ₹18 and ₹21.30 in the last three financial years.
• Both Vedanta and Hindustan Zinc focus on ESG, making them attractive for ESG investments.
• The demand for silver is on the rise since it is often considered a cheaper alternative to gold. Nickel, which is also called the metal of the future, is solely produced by the Vedanta Group. These aspects make the two shares more appealing.
• Investing in Hindustan Zinc or Vedanta must rely on the investor’s portfolio objective. While Hindustan Zinc focuses more on zinc and silver, holding Vedanta’s shares exposes investors to a variety of metals. 

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