The Hindustan Zinc share price has plunged nearly 6% in trade today. The promoters have reportedly sold shares worth Rs 7.500 crore in block deal, as per CNBC-TV8. As per the report the shares are at a 10% discount to the June 17 closing price. That apart the board of India’s largest integrated zinc and silver producer has announced Rs 12,000 crore capex plans and plans an integrated metal complex at Rajasthan. This is one of the key reasons why JM Financial is positive on the stock and have maintained a Buy rating.
They believe that the share price can go up nearly 13% from current levels and have target price of Rs 550 per share based on its diversified revenue stream and increasing contribution from silver sales. According to JM Financial, 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, the scope of upside is fairly large.
Here is a detailed analysis of the key factors supporting JMFinancial’s bullish call on Hindustan Zinc
JM Financial on Hindustan Zinc: New capacity to expand silver refining output
JM Financial believes that the the company’s existing smelting capacity will expand to 1,379ktpa from 1,129ktpa oafter the new 250kt integrated Zinc metal complex comes up at Debari along with associated mining and milling capacities as a part of its Phase I expansion. The mined metal capacity is expected to increase from existing 1,180ktpa to 1,510ktpa post expansion while silver refining capacity is set to increaseto 830ktpa from 800ktpa. The project is expected to be completed within 36 months.
This is particularly relevant given the recent spike in silver rate. This widely used metal in the jewellery and industrial space has jumped over 11% in 1 month.
JM Financial on Hindustan Zinc: Zinc demand robust
Hindustan Zinc expects zinc demand to remain buoyant on the back on consistently growing domestic steel production. This, according to JM Financial, “allows the company to strategically expand its existing capacities to 2 million tonne by 2030.”
The Rs 12,000 crore capex is expected to be funded through internal accruals and debt and will be spread over FY26, FY27 and FY28. The company expects cost per tonne of setting up this smelter to be significantly lower than global average.
JM Financial on Hindustan Zinc: Maintain volume guidance for FY26
Hindustan Zinc maintains its FY26 volume guidance at at 1,090-1,110kt refined metal and 700-710 tonne for silver. The guidance for Zinc is maintained at $1,025-1,050 for FY26. After the 250ktpa expansion, the “company expects revenue to reach Rs 40,000-43,000 crore with EBITDA.