The government though, still hopes to push through the long-delayed sale this financial year, one of the sources said.
The government plans to sell its over 29% stake in tranches, starting with the sale of about 5% stake. Vedanta Group holds a 64.9% stake.
Hindustan Zinc’s stock price has declined over 16% from the highs touched in January due to a sharp drop in zinc prices and as Vedanta tried to sell two units to the miner.
The government is waiting for the share price to recover, the first official said.
“Merchant bankers have advised against a sale offer at the moment as institutional investors are presently not keen to invest in the metals sector,” the official said. The advice came after road shows were conducted in June.
Both officials spoke on condition of anonymity as they are not authorised to speak to the media. The Ministry of Finance did not respond to Reuters’ emailed queries. International zinc prices have corrected 30% in the last six months due to global macroeconomic uncertainties and weak demand recovery in China, rating agency ICRA said last month.
The global consumption growth of aluminium, copper and zinc is expected to remain muted this year, it added.
Moreover, last week, the country’s top court dismissed Vedanta’s plea to push the government to divest its stake in Hindustan Zinc.
The government had planned to sell about 5% in Hindustan Zinc last financial year, but delayed the move as prices dropped after the miner said in January it would buy two of Vedanta’s zinc subsidiaries.
The government opposed the deal, which ultimately lapsed a few months later.
Even during roadshows in December, institutional or large investors told government officials they were not keen on picking up significant stakes in Hindustan Zinc, the second official said.
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