At a time when silver prices are swinging sharply and investors are trying to make sense of global demand trends, one silver focused stock has caught the attention of global brokerage firm Jefferies. Even after trimming its price target to Rs 700 from Rs 750, the brokerage house Jefferies continues to maintain a ‘Buy’ rating on the stock. Though revised downward, the target still implies nearly 20% upside from the current market price.
The stock in focus is Hindustan Zinc.
Let’s take a look at the key reasons why the brokerage house is bullish on this silver stock and what is the rationale behind it –
Jeffries on Hindustan Zinc: Global silver deficit likely to continue
One of the biggest reasons behind the bullish stance is the expected continuation of a supply deficit in the global silver market.
As per the global silver industry body, The Silver Institute (TSI), “global silver market is expected to remain in deficit for sixth consecutive year in 2026.”
Although the shortfall may narrow compared to 2025, the imbalance is still significant. The report noted that the market deficit in 2026 is expected to stand at 2.1 kilo tonnes, equivalent to 6% of global supply.
Jefferies on Hindustan Zinc: Demand to remain stable despite industrial weakness
Another factor supporting the outlook is stable overall demand. According to the brokerage report, “global silver demand is projected to remain broadly flat” in 2026. The Silver Institute expects that rising investment demand, which accounts for 16% of total demand, will offset weakness in industrial demand, jewellery and silverware.
Industrial demand, which makes up 58% of total usage, is expected to soften mainly because of thrifting and substitution away from silver in the photovoltaic sector. Jewellery and silverware account for around 23% of demand.
Jefferies on Hindustan Zinc: Mine production to peak soon
Supply trends also play a key role. The projected 1.5% rise in global silver supply in 2026 is expected to be driven by 1% growth in mine production and a 7% rise in recycling. However, this growth may not last long.
According to The Silver Institute, global mine production is likely to peak in 2026 and decline afterwards as several mines approach the end of their life cycle. Recycling growth is also expected to face limitations. This may be due to the lower availability of photographic scrap and depletion of silverware stocks in Western markets.
Jefferies on Hindustan Zinc: Declining share of primary mines
Another structural trend noted in the brokerage report is the falling share of primary silver mines.
Primary mines contributed 28% of production in 2024 compared with 32% in 2015. Today, a significant portion of silver comes as a by-product from lead, zinc, copper and gold mines.
Jefferies on Hindustan Zinc: Earnings outlook and valuation support
While Jefferies has cut its FY26-28 Estimated Earnings Per Share by 6-7% due to slightly lower silver price assumptions of 75 to 76 US dollars per ounce, the brokerage still expects strong growth ahead. It sees a 37% YoY EPS growth in FY27 estimated.
The company derives about 42% of its nine month FY26 EBIT from silver, and this share is expected to rise further. According to the brokerage report, valuations at 8.8 times FY27 Estimated Enterprise Value to EBITDA are higher than the 10 year average of 7.8 times.
Conclusion
Overall, Jefferies has retained its ‘Buy’ rating with a revised price target of Rs 700, based on 10 times September 2027 EV/EBITDA estimates. The brokerage projects over 20% return possibility, including a 5% dividend yield.