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Target: ₹580 CMP: ₹ 483.45 Overall, Q2FY26 was a robust quarter for Hindustan Zinc with operating profit improving by 7.8 per cent y-o-y on the back of higher zinc and silver prices, lower costs, and marginally better mined metal production. In Q2FY26, silver and zinc prices surged, with silver hitting a record $48/oz and zinc rising about 10 per cent amid trade tensions and tight supply, supporting earnings. However, the company trimmed its mined metal and silver production guidance following weaker H1FY26 output. Going forward, it plans to invest about $400 million in growth capex during FY26, primarily for the 250 KTPA smelter project at Debari (₹12,000 crore, targeted for Q2-FY29) and the zinc tailings project (₹3,800 crore, targeted for Q4-FY28). We maintain a positive outlook on the company, supported by firm metal prices, tightening global silver supply and rising zinc demand from India’s expanding steel capacity. The company’s cost efficiency in maintaining zinc costs near $1,000/t, along with its ambitious capacity expansion, further strengthens its growth prospects. Considering the favourable price environment, we revise our FY26 revenue and EBITDA estimates upward by 3.2 per cent and 4.5 per cent, and FY27 estimates by 5.5 per cent and 6.3 per cent, respectively. We continue to value Hindustan Zinc at 12x EV/EBITDA multiple on FY27 EBITDA estimate of ₹20,600 crore (vs prev est. ₹19,400 crore) to arrive at a target of ₹580 (vs previous target of ₹553). Published on October 29, 2025
