Hindustan Zinc (HZL): Can the Silver rally sustain record earnings?

Silver prices have been in the limelight with Mumbai prices trading at lifetime highs of Rs 3.18 lakh per kg levels. This precious metal has gained a staggering almost 24% since the start of the calendar year.

Local silver prices have tracked international prices, which have surged to $94 per ounce levels in overnight trading on the LME.

While silver has wide applications in the industrial sector, in electronics and solar panels, amongst others, it is being increasingly viewed as a ‘safe haven’ asset.

Akin to gold, the global turmoil including the latest tariff measures announced by the Trump administration related to Greenland, is driving silver to record levels. The ‘euphoria’ in silver prices shows no signs of abating, despite the warnings by several well-known investors, including the well-recognised market guru, Vijay Kedia.

On Dalal Street, Hindustan Zinc, which also produces silver, has gained prominence. The stock rose 3% to Rs 680 in mid-Tuesday afternoon trading, and it had hit a 52-week high in earlier trade at Rs 697.

The stock has jumped more than 46% over the past one year compared to a 7.5% rise in the Sensex during this period. Investors it seems are increasingly looking to play the surge in silver prices via this stock.

Its board of directors had declared an interim dividend of Rs 10 per equity share on June 11, 2025.  In FY25, the company had paid a dividend of Rs 29 per share.

Vedanta is the promoter of Hindustan Zinc holding a 61.8% stake in the metal major at the end of the December 2025 quarter.

Q3FY26 – Silver drives Hindustan Zinc’s earnings to record

Hindustan Zinc, which is among the top 5 silver globally, sold 158 tonnes of refined silver in the December 2025 quarter, broadly flat on a y-o-y basis.

Spot silver prices in Mumbai averaged Rs 2.15 lakh per kg levels in the December 2025 quarter vis-à-vis Rs 91,700 per kg levels a year earlier, a rise of 136% y-o-y.

In its presentation, Hindustan Zinc has highlighted an average international price of $54.7 per ounce in Q3FY26 vis-à-vis $31.4 per ounce a year earlier, a rise of 74%.

Hedging Strategy

Silver prices have skyrocketed globally, however, in its annual report of FY25, Hindustan Zinc has highlighted it does strategic hedging depending upon prevailing market volatility and pricing scenario. The company has highlighted that in its silver business, 53% of its exposure to silver is hedged through commodity derivatives.   

Depending on the commodity derivatives Hindustan Zinc has entered into, the company will leverage the upturn in silver prices, and it may not fully realise the surge in spot silver prices right away.

The Udaipur-based company’s silver division revenues were Rs 2,676 crore in the December 2025 quarter, a jump of 82.6% y-o-y. The segment profit of the silver division also jumped 79.6% y-o-y to Rs 2,285 crore in Q3FY26.

The silver division contributed nearly 25.2% of the company’s consolidated revenues in Q3FY25, however, it made up 44 % of total segment profit of Rs 5,189 crore in the quarter under review.

Strong performance of the silver division helped the company’s consolidated net profit rise 46.2% y-o-y to a record Rs 3,916 crore in the December 2025 quarter.

Table: Hindustan Zinc’s Financial Performance

Efficiency of assets – Return on Equity (ROE)

Hindustan Zinc has a return on equity (ROE) of an impressive 72.9% on a consolidated basis in the current financial year, according to Screener.in.

Other leading non-ferrous players like Hindalco Industries has a 14% ROE on a consolidated basis in the current financial year, according to Screener.in.

Expansion plans for silver production

Hindustan Zinc’s silver production was 451 tonnes in the first nine months of the current financial year vis-à-vis 511 tonnes a year earlier.

The company has highlighted in its investor presentation that it is ramping up its annual silver production capacity to 1,500 tonnes over the next few years, and the expanded capacity is expected to come on stream in phases over the next few quarters.

Valuations and investors on Dalal Street

Hindustan Zinc trades at a consolidated P/E of 24.5 times, according to Screener.in, and over the past 5 years, this stock’s P/ E has varied between 10.7 times and 40.5 times. 

Other leading non-ferrous stocks like Hindalco, trades at a consolidated P/ E of 11.8 times, and over the past 5 years, its P/E has varied between 5.4 times and 38 times.

Stocks in the metal sector tend to be volatile since they are very exposed to fluctuations in the global economy. Investors could put Hindustan Zinc on their watch list.

In conclusion, the surge in silver prices has been a key driver for Hindustan Zinc’s performance over the last many months. Whether this dream run will last will depend more on whether the euphoria around silver sustains in time to come.

If it does, company will continue to benefit from it. In fact, it could benefit a lot more than currently on account of expanded capacities going live.

However, if the euphoria around silver were to cool off, then the company’s prospects, especially with relation to its silver business, could turn quite dramatically. Ofcourse, the silver hedges would cushion the blow, somewhat.

Disclaimer:

Amriteshwar Mathur is a financial journalist with over 20 years of experience.

The writer and his family have no shareholding in any of the stocks mentioned in the article.

Disclaimer: The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.