In today’s session, MCX silver futures for March 5, 2026 plunged 9%, down Rs 24,200 to Rs 2,48,400 per kg. Volatility also rose after MCX imposed additional margins on gold and silver futures across all variants after a periodic risk review. Higher margins raise the capital required to hold positions, often leading to reduced leverage and some unwinding of trades in the near term. This can increase volatility and may put short-term pressure on prices.
On the global stage, Hindustan Zinc ranks among the leading silver producers, with annual output of 22.5 million ounces — ahead of Grupo Mexico’s 12.1 million ounces and not far from top players such as Fresnillo at 52.5 million ounces and Newmont at 28 million ounces. The company also operates in the lowest quartile of the global zinc cost curve and has a mine life of about 25 years.
Can investors buy?
Hindustan Zinc’s sensitivity to silver prices stems from its core business mix and how markets view its earnings profile. Unlike a pure zinc or lead producer, the company derives a substantial share of its profitability from silver, with estimates indicating that around 40–45% of EBITDA can be linked to silver realisations when prices are strong.
When silver prices rise, the company typically benefits from higher revenue and improved margins since mining costs remain relatively stable, which in turn lifts profit expectations. Conversely, a decline in silver prices can quickly weigh on earnings outlook as a large portion of profits is tied to the metal without a corresponding reduction in operating costs.
As a result, investors tend to value the stock not only based on zinc fundamentals but also on movements in silver prices, making Hindustan Zinc trade more like a hybrid between a base metal and a precious metal producer, Nirpendra Yadav, Commodity Research Analyst at Bonanza.
In a recent report, HSBC upgraded the stock to Buy from Hold and raised its target price to Rs 750 per share. The brokerage values Hindustan Zinc at 11x FY27E EV/EBITDA, up from 9.5x earlier, placing it at the higher end of its five-year trading range of 5–11x. The valuation reflects the company’s strong balance sheet and a stable-to-improving outlook for LME zinc and silver prices. “We see further earnings upside potential from spot LME zinc and silver prices,” HSBC said.IIFL Capital, following the company’s Q3 earnings last month, initiated coverage on Hindustan Zinc with an Add rating and a target price of Rs 712. The management maintained its silver volume guidance for FY26 at 680 tonnes (±10 tonnes). While cost of production stood at $940 per tonne in 3Q, full-year cost guidance remains at $950–1,000 per tonne, reflecting higher mine development activity and grade volatility.
For FY26, capex is guided at $700 million, split between $400 million for maintenance and $300 million for growth, with capex expected to rise further in FY27 and FY28 to support expansion.
Hindustan Zinc Q3 snapshot
The company reported its highest ever quarterly topline and bottom line growth in the December quarter, backed by a 4% YoY growth in its mined metal production. The Vedanta arm’s consolidated net profit jumped 46% to Rs 3,916 crore compared to Rs 2,678 crore in the year ago period.
The company’s total revenue from operations in Q3FY26 was also its highest-ever quarterly revenue at Rs 10,980 crore, up 27% from Rs 8,614 crore posted in the corresponding quarter of the last financial year.
Its mined metal production in the quarter under review stood at 276 Kt, remaining its highest-ever for the third quarter. It was up 7% QoQ growth.
The profit after tax (PAT)s was up 48% QoQ while total revenue increased 28% sequentially.
The company in its filing to the exchanges, reported that its quarterly cost of production was the lowest in 5 years, standing at $940 per tonne, which is 5% better QoQ and 10% YoY.
(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)
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