Stock of the day: Anil Singhvi picks Hindustan Zinc; here is the reason why

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Stock of the day: Anil Singhvi has recommended Vedanta Group Company, Hindustan Zinc today. Notably, the promoters of Vedanta have increased their stake in the delisting process.

The Market Guru has highlighted 2 key pointers:

1)      Dividends will come earlier than expected in Hindustan Zinc after the promoters raised stake. With promoters increasing stake, they will get additional dividend

2)      Government is thinking of selling off its stake in Hindustan Zinc. Singhvi said there is possibility that in the month of May a decision can be taken on this front

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There is a possibility that the Government may sell its stake directly to Vedanta at a good price or they may do an Offer for Sales (OFS) like Tata Communication to the investors. It is important to understand that the sale will definitely happen at premium to current market price. Also, there is a possibility that dividend may be received ahead of stake sale said Singhvi.

Singhvi said that Hindustan Zinc is trading at a P/E multiple of 10, indicating that this is the cheapest share available in the metal sector. Singhvi said that Hindustan Zinc can see levels of Rs 400 in next 2 to 3 months from here on. Investors should buy and hold stock in their portfolio. The stop-loss on this trade would be Rs 295 for a target of Rs 317, Rs 325 and Rs 335.