- Hindustan Zinc's Q3 EBITDA beat consensus by nearly 8%, with profits up 46% YoY
- Zinc production rose 4% YoY and refined metal sales grew 5% YoY in the quarter
- Silver contributed about 44–50% of EBIT, benefiting from a 60–65% rise in spot prices
Hindustan Zinc Ltd. delivered a strong third quarter performance, driven by higher silver prices, better volumes and tighter cost control, prompting most brokerages to raise earnings estimates and target prices. However, views diverge on how much of the commodity upside is already priced into the stock.
Strong Quarter, Ebitda Beats Across The Board
Hindustan Zinc reported a solid December quarter with Ebitda coming in nearly 8% ahead of consensus. Profit surged 46% year-on-year, aided by higher silver and zinc prices, a weaker rupee, higher refined metal volumes and a sharp decline in costs. Zinc cost of production (excluding royalty) fell to $940 per tonne, down 5% quarter-on-quarter and 10% year-on-year, supported by higher domestic coal usage, better by-product realisations and operating leverage.
Operationally, mined metal production rose 4% year-on-year and 7% quarter-on-quarter, while refined metal sales grew 5% year-on-year and 9% quarter-on-quarter. Silver volumes declined marginally year-on-year but improved sequentially. The company also benefited from additional lead concentrate sales, which added to earnings during the quarter.
Silver Emerges As Key Earnings Lever
Brokerages broadly agree that Hindustan Zinc is a major beneficiary of the ongoing silver rally. Spot silver prices are currently about 60–65% above the Q3 average, sharply improving near-term earnings visibility. Silver contributed roughly 44–50% of EBIT in the quarter, a structurally higher share than historical averages.
Jefferies and HSBC believe this shift justifies premium valuations, noting that even though the stock trades above its long-term EV/Ebitda average, the rising contribution from silver materially changes the earnings profile. Both brokerages expect the next quarter to be even stronger seasonally, supported by higher volumes, elevated silver prices and continued cost discipline.
Hindustan Zinc Q3 Results: Profit Soars, Margin Expands Amid Silver Boom
Earnings Upgrades, But Valuation Debate Remains
Jefferies raised its FY26–28 EPS estimates by 3–10% and expects a sharp 47% year-on-year EPS growth in fiscal 2027, followed by further growth in financial year 2028. It retained a Buy rating and increased its target price to Rs 750, citing sustained silver strength, resilient zinc prices and controlled costs.
HSBC also maintained a Buy with a Rs 750 target, highlighting Hindustan Zinc's low-cost positioning, strong free cash flow generation and improving balance sheet, with the company ending the quarter in a net cash position.
Citi, however, remains more cautious. While it acknowledged that Q3 results were slightly ahead of expectations and raised its target price sharply to Rs 585, it retained a Sell rating. Citi expects zinc prices to face pressure from rising inventories and easing regional supply constraints, while silver prices could correct after first quarter of next fiscal as geopolitical risks moderate. Its longer-term commodity assumptions remain well below spot levels, leading to a more conservative valuation view.
Costs Under Control, Capex And Growth Visibility Intact
Management reiterated that zinc cost of production is likely to remain range-bound at $950–1,000 per tonne, with renewable power adoption and efficiency gains expected to offset pressures from deeper mining and grade variability. Renewable energy usage is targeted to rise to about 30% by fiscal 2026-end and 70% by financial year 2028.
On growth, Hindustan Zinc is progressing with its refined metal expansion and associated mining capacity additions, with major capex projects slated for completion by fiscal 2029. Until then, volumes are expected to grow modestly, keeping earnings largely leveraged to commodity prices and costs.
Watch LIVE TV, Get Stock Market Updates, Top Business, IPO and Latest News on NDTV Profit.
