Mumbai: Hindustan Zinc Limited delivered a stronger-than-expected fourth quarter for FY26, with cost of production hitting its lowest level ever and a surging silver business, prompting brokerages to reaffirm bullish ratings on the stock.
Hindustan Zinc's Q4 earnings beat was led by its leadership
in refined zinc cost of production (CoP), excluding royalty, which fell 4%
quarter-on-quarter to USD903/t in Q4FY26, down 9% year-on-year, the lowest
quarterly CoP since the full transition to underground mining.
Analysing the company’s performance, Jefferies said the zinc
major reported a good quarter, stating that the company’s valuations are
justified due to rising share of silver in earnings before interest and tax
(EBIT). The firm expects silver to remain in deficit during CY26, and zinc
prices to remain largely balanced. “HZ has delivered strong 34% compounded
annual growth rate (CAGR) in earnings per share over FY24-26,” it said.
Jefferies expects this momentum to continue in FY27 with EPS rising further 33%
year on year. “We fine-tune estimates and retain Buy with Rs 700 price target,
based on 10x FY28E EV/EBITDA, which implies TSR (total shareholder return) of
24% including 5% dividend yield,” Jefferies noted. The firm has a price target
of Rs 700 for Hindustan Zinc.
HSBC Global increased its EBITDA estimates on Hindustan
Zinc by 0.4-1.4% for FY27/28e and raised the target price to Rs 730 (from
INR720). “We like HZ’s low-cost zinc operations – mining operations rank in the
first decile (global zinc mining cost curve) and smelting operations are in the
first quartile (global zinc smelting cost curve) – the silver beta, and its
strong balance sheet and cash flows,” HSBC said in a note.
Nuvama Institutional Equities, which upgraded the stock to “Buy”
from “Reduce” with a revised target price of Rs 700 per share, noted that the company’s
management had guided FY27E CoP in the USD975–1,000/t range and emphasized that
every 2% increase in the renewable energy mix could reduce zinc CoP by USD1/t. “Hindustan
Zinc’s earnings depend primarily on commodity prices until H1FY29. The tight
supply market is likely to keep commodity prices high. We forecast a 3% volume
CAGR for refined metal and a 7% volume CAGR for silver over FY26–28E,” Nuvama
said.
EBITDA beats
Brokerages noted that the company beat their estimates by delivering a record high quarterly net profit of ₹ 5,033 crore, up 68% year on year, and a record Quarterly EBITDA of ₹ 7,747 crore, up 61% YoY
JM Financial Institutional Securities, which maintains a BUY recommendation with a target price of Rs 765, noted Hindustan Zinc’s consolidated EBITDA of Rs 77 billion surpassed its own estimate of Rs 70 billion. “We remain positive on Hindustan Zinc given its presence in the lower end of the global cost curve, facilitated by high-grade captive mines sufficient to meet requirements for decades, 100% captive power plants, sizeable scale, diversified revenue stream with increasing contribution from silver sales,” it said.
Another factor noted by brokerages is the company's strengthening net cash position, with net cash of Rs 56 billion versus Rs 3 billion at end-Dec’25. The company also announced an interim dividend of Rs 11 per share. JM Financial pointed to this as evidence of Hindustan Zinc's strong free cash flow generation.
YES Securities, maintaining an ADD rating with a target of Rs 682, noted that Hindustan Zinc’s EBITDA margins expanded to 56.8% in Q4FY26 from 55.0% in Q3FY26, driven by operating leverage, with silver providing meaningful earnings support and downside protection across base metal cycles.
Shares of Hindustan Zinc have surged nearly 32% over the
past 12 months, delivering returns higher than those of the benchmark indices
and the Nifty Metal index.