- Hindustan Zinc's silver revenue rose 7% sequentially to Rs 4,111 crore in Q2FY27
- Silver sales volume increased 16% quarter-on-quarter to 173 tonnes in Q2FY27
- Silver contributed 27% of revenue and 43% of segment profit in Q2FY27
Silver was more than a silver lining in the results declared by Hindustan Zinc on Tuesday, as the precious metal continued to play an anchor role in driving the company's earnings. Even as the prices of the commodity is down sequentially, Hindustan Zinc's revenue on account of silver sales accelerated during the July-September period, the investor presentation shows.
The average LBMA silver price declined 14% quarter-on-quarter to $62.6 per ounce in Q2, as against an average price of $73.2 in Q1, the company highlighted. Despite this unfavourable shift, Hindustan Zinc's silver revenue rose 7% sequentially to Rs 4,111 crore, from Rs 3,839 crore.
Compared with a year ago, silver revenue was up 141%, from Rs 1,706 crore, when silver averaged $39.4 an ounce.
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More Metal, Not Better Prices
The main reason behind this surge was a surge in volume, as Hindustan Zinc sold 173 tonnes of silver in the quarter, up 16% from 149 tonnes in Q1 and 17% higher than a year ago. Production also hit 173 tonnes, up 20% year-on-year, per the investor presentation.
Silver is a by-product of Hindustan Zinc's lead-zinc mining, so the extra silver came from higher overall output. Mined metal production hit a record 271 kilo tonnes, up 5% year-on-year, which the company attributed to higher ore production. Refined metal output rose 7% to 264 kilo tonnes, helped by extra smelter capacity from debottlenecking. Refined lead, which is closely tied to silver recovery, rose 9% sequentially to 51 kilo tonnes.
A slightly weaker rupee also helped a little. The rupee averaged 95.57 to the dollar in Q2, compared with 94.58 in Q1.
Silver Outweighs Zinc
The second-quarter performance reiterates how crucial silver has become to Hindustan Zinc. The metal made up about 27% of revenue in Q2, but its segment profit was Rs 3,609 crore, about 43% of the Rs 8,329 crore earned by the zinc, lead and silver business. Silver segment profit rose 8% from Q1 and was more than double the Rs 1,464 crore a year ago.
For the first half of FY27, the company said silver contributed about 45% of its overall profitability.
This dependence, however, may also work against the company if silver further looses its pricing point in the global market. According to the company's own sensitivity estimates, every $1 an ounce change in silver prices moves its annual Ebitda by Rs 200–225 crore. So a sustained fall in silver prices would weigh on earnings unless volumes keep rising.
A Strong Quarter Overall
Hindustan Zinc's consolidated net profit rose 142% year-on-year to a record Rs 6,412 crore in Q2FY27, and 17% from the previous quarter. Revenue from operations rose 77% to Rs 15,093 crore. Ebitda rose 108% to an all-time high of Rs 9,285 crore, with the margin widening to 62% from 52% a year ago.
Sequentially, the net profit rose 17.2%, revenue climbed 9.8% and Ebitda rose 14.9%. The margins also increased by over 250 basis points, as compared to 58.6% in the preceding quarter.
The results were declared after the market hours. The stock had closed 0.3% lower at Rs 538.4 apiece on the NSE, compared to a 1.11% decline in the benchmark Nifty 50.
ALSO READ: Hindustan Zinc Q2 Results: Net Profit Rises 17% To Rs 6,412 Crore, Margin Expands
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