The Hindustan Zinc share price is steady in trade after it reported in-line Q3 numbers. The growth was driven by favourable commodity prices and volume recovery. The company reiterated its refined metal guidance of 1,075-1,100 ktpa and expects to achieve silver output guidance of 680 tonnes for FY26. However, brokerages see room for limited upside over the near-term despite the rally in silver recently.
Here is a detailed analysis of the top brokerage views on Hindustan Zinc for the next 12 months and the outlook for this key metal sector play from Vedanta Group going forward.
Motilal Oswal on Hindustan Zinc: All positives priced in
Motilal Oswal has a Neutral rating on Hindustan Zinc as they believe that the current valuation has priced in all the positive factors. They have set a target price of Rs 720 per share and this indicates about 9% upside from current levels. Hindustan Zinc expects further cost improvement by Q4FY26, supported by higher renewable-energy usage and better ore grades. Renewable energy contributed 20% of total power in Q3FY26, and the company expects to reach 25% by FY26-end.
According to Motilal Oswal, the recently announced expansion plans are aligned with its long-term objective of doubling existing capacity and enhancing long-term earnings visibility. However, the brokerage house is not too optimistic about the near-term growth opportunities and expect earnings growth to remain capped in the near-term.
They see “LME price inflation emerging as the key catalyst for incremental upside in the near-term.” They have increased the earnings estimates for FY26 on the back of higher silver prices, while maintaining the earnings estimates for FY27 and FY28 estimates.
Nuvama on Hindustan Zinc: Valuations expensive
Nuvama has a Reduce rating on Hindustan Zinc as they consider the stock trading “expensive at 11.1x FY28e EV/EBITDA.” They believe the stock is factoring in elevated commodity prices and trading at a slight premium to its five-year average. They have a target price of Rs 591 per share. Not only is this target lower than the current price, it also implies a 10% downside from current levels.
As per Nuvama’s calculations, “on an MTM basis i.e at silver price of $90/ounce and zinc price $3,200/t, Hindustan Zinc has the potential to deliver FY28 EBITDA of Rs 34,000 crore.” According to them a $100/t change in zinc price changes target price by 2% and $1/ounce change in silver prices changes target price by 1%. They believe that the current price “factors in average zinc price of $3,000/t and silver of $65/ounce in FY28.”
JM Financial on Hindustan Zinc: Predict 16% upside
Another key Indian brokerage house, JM Financial has a Buy on Hindustan Zinc. They have set a target price of Rs 770 per share, implying upside of 16% from current levels. The company has maintained its FY26 volume guidance for mined metals / refined metals / silver and is expecting very strong Q4FY26 in terms of volume.
The optimism about the Q4 FY26 performance is driven by three key factors
-Seasonally strong quarter
-All the shutdowns cleared and
-Debottlenecking projects completed
Consequently, the company expects Silver production to exceed 200 tonnes in Q4FY26 and has maintained its annual guidance of 680 tonnes. The growth capex guidance has been revised to $300 million and maintenance capex guidance maintained at $400 million for FY26. JM Financial sees these as positive factors supporting the Buy recommendation.
Hindustan Zinc’s hedging strategy
Another factor that most brokerages have touched upon is the hedging strategy implemented by Hindustan Zinc. In order to safeguard margins and improve earnings visibility, the company plans to hedge 10-20% of its annual volumes going ahead. This acts as a safeguard measure for the topline as well as the margins in a volatile price scenario.
As per available data, the company hedged 47 kt of Zinc and 55 tonnes of silver at $37/t.oz in Q3FY26. It also plans to hedge a similar percentage of volumes going ahead in order to ensure margin stability. Moreover, the company also plans to operate in zinc plus lead mode going ahead given the elevated zinc prices – leading to more production of zinc along with a due amount of silver.
Consequently, JM Financial pointed out that the company is expected to remain focused on debottlenecking of lead production facilities in order to increase silver production. These along with the renewable energy mix currently stands at 20% of total power requirement which is expected to go up to 70% by FY28. This is also expected to add to savings.
Conclusion
Overall, most brokerages are optimistic about the earnings potential given the rally in silver prices. However, some like Motilal Oswal and Nuvama believe the near-term room for a rally is limited as most of the positives are already priced in. As a result, the recommendation is highlighting the note of caution.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.