Hindustan Zinc In Sweet Spot: B&K Initiates Coverage Amid Silver Upside, Low Costs — Check Target Price

Hindustan Zinc Ltd. has received a Buy rating from B&K with a target price of Rs 610. This implies an upside of 22.5% from current levels. The brokerage’s thesis rests on HZL’s industry-leading cost advantage, large-scale capacity expansion plans, strong silver leverage and forward integration that together create a compelling long-term growth narrative.

A Vedanta Group company with a 61.8% promoter holding, its operations span some of the most technologically advanced underground zinc-lead mines in the world, including Rampura Agucha, Sindesar Khurd, Zawar, Kayad and Rajpura Dariba.

These assets support a refined metal production capacity of 1.123 mtpa, placing Hindustan Zinc among the lowest-cost producers globally. The company is also the fourth-largest silver producer worldwide, with silver extracted as a by-product from lead operations, benefiting from rising industrial and clean energy-linked demand.

B&K values Hindustan Zinc on fiscal 2028 earnings, assigning an EV/Ebitda multiple of 9x for the zinc and lead segments and 15x for silver, with average realisations assumed at $3,000 per tonne for zinc, $2,050 for lead and $44 per ounce for silver.

The stock currently trades at 9x FY28E Ebitda suggesting meaningful re-rating potential as expansion milestones progress.

Hindustan Zinc’s cost advantage is a core pillar. The company’s zinc production cost stood at $994 per tonne in second quarter of this financial year, around 30% lower than the global peer average of $1,300–1,400 per tonne. This positions HZL uniquely to generate strong cash flows even in softer commodity price environments.

A major catalyst for future growth is the company’s transformative Hindustan Zinc 2.0 plan. Approved by the board in June 2025, Phase I aims to expand integrated refined metal capacity from approximately 1.2 mtpa to 2.0 mtpa over the next five years. The planned capital investment of Rs 250–300 billion marks one of the most ambitious expansions in India’s metals sector, expected to materially enhance production scale and operational efficiencies.

Silver is another powerful earnings driver. With current output at roughly 700 tonnes per annum and projected to rise to 1,500 tonnes post expansion, Hindustan Zinc is positioned to benefit from a structural bull market in silver.

Silver prices are expected to remain above $50 per ounce across fiscal 2026, lifting silver’s contribution to Ebitda from 28% in financial year 2025 to 42% in fiscal 2027. The company has hedged 120 tonnes at $37 per ounce for the second half of this financial year, while around 280 tonnes will be sold at spot prices, offering upside exposure.

Forward integration is also set to boost profitability, with the DPI/NPK fertiliser plant expected to add Rs 4 billion in annual Ebitda through greater control of the sulphuric acid value chain.

Additionally, near-term production gains will come from de-bottlenecking initiatives across the Debari Roaster, Dariba cell-house and Chanderiya smelter, all scheduled for completion in fiscal 2026.