Vedanta group firm Hindustan Zinc has engaged a leading advisory firm to study its plans of spinning off business into three separate entities to increase its market capitalisation.
Without divulging the name of the advisory firm, Hindustan Zinc Ltd Chief Executive Officer (CEO) Arun Misra said it will submit the report in six to eight weeks, based on which the company will take its next step.
In a telephonic interview to PTI, Misra said the current market cap of the company is $ 16 billion but he believes HZL deserves a valuation of $ 25-30 billion.
“Perhaps we are unable to expose the full value of Hindustan Zinc because everything is branded under one entity,” he said.
“We believe if there are three companies — one dedicated to the cause of silver, one to zinc and lead and one to all kinds of recycling… the three together will have a much higher market cap compared to what one company has,” he said.
Last month, HZL had said the company’s board has decided to undertake a “comprehensive review of its corporate structure for unlocking potential value”.
According to a regulatory filing, the move is aimed at creating separate legal entities for zinc, lead, silver and recycling businesses.
“…considering the scale, nature, and potential opportunities for various business verticals of the company, it should undertake a comprehensive review of its corporate structure for unlocking potential value,” as per the filing.
The strategic objectives outlined by the company’s board for undertaking such an exercise included unlocking value for all stakeholders and creating businesses that are positioned to better capitalise their distinct market positions and deliver long-term growth.
Besides, the move aims at forming appropriate capital structure and capital allocation policies based on business-specific dynamics and sharpen focus on core competencies and appropriate realignment of the company’s resources.
“There has been no communication between the government and the company on this,” he added.
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