HSBC has upgraded its rating on Hindustan Zinc Ltd., as per its latest note, issuing a 'buy' call scrapping the previous 'hold' and raised its target price to Rs 750 from Rs 520 driven by higher zinc and silver price assumptions and stronger earnings visibility. The brokerage predicts a nearly 18% upside as it believes the stock deserves a higher valuation multiple, supported by its strong balance sheet and a stable-to-improving outlook for LME zinc and silver prices.
The upgrade follows HSBC's decision to raise its FY2026–28 zinc and silver price forecasts by around 5–23%, which has translated into a 12–20% increase in Ebitda estimates for FY2027–28. For FY27, HSBC now expects revenue of Rs 45,488 crore million, Ebitda of Rs 26,893 crore, and net income of Rs 17,305 million, reflecting improved commodity assumptions and operating leverage.
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HSBC has revised its valuation multiple for Hindustan Zinc to 11x FY27 EV/EBITDA, up from 9.5x earlier. This places the stock at the upper end of its five-year trading range of 5–11x, which the brokerage justifies by pointing to the company's balance sheet strength and favourable medium-term outlook for zinc and silver. Based on this valuation and upgraded estimates, the new target price implies around 15% upside from the current share price.
The brokerage also highlights further earnings upside potential if spot LME zinc and silver prices remain elevated. However, HSBC flags key downside risks, including a sharp correction in zinc or silver prices, potential royalty increases linked to lease expiries, large dividends funded through debt, and minority-unfriendly related-party transactions.
Within the broader metals and mining sector, HSBC retains buy ratings on Hindalco and NALCO, with Hindalco remaining its preferred pick. The brokerage adds that underweight investor positioning in metals could continue to support valuation multiples even as commodity prices remain elevated.
Shares of Hindustan Zinc are currently trading 3.21% higher at Rs 658.05 apiece, as compared to a 0.39% decline in the benchmark NSE Nifty 50.
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