Hindustan Zinc share price targets as Vedanta-promoted firm beats Q4 estimates

Hindustan Zinc Ltd (HZL) shares are in focus after the Vedanta-promoted mining and resources producer of zinc, lead, silver and cadmium reported a 47 per cent year-on-year (YoY) increase in consolidated net profit for the March quarter, reaching Rs 3,003 crore — its highest-ever fourth-quarter profit, surpassing Street estimates. The record performance was supported by a sharp reduction in production costs, which declined to a 16-quarter low of $994 per metric ton.

HZL's revenue for the quarter rose 20 per cent YoY to Rs 9,087 crore, the highest ever recorded by the company. Add to that the Anil Agarwal-led company reported a sharp fall in net debt sequentially, making stock analysts positive on the counter. 

In-line with management guidance and given the current spot metal prices, Antique Stock Broking revised its silver output assumption downward by 11.8-13.4 per cent and lead prices downward by 4.8 per cent, resulting in a decrease in FY26/ 27 Ebitda by 1.8 per cent/ 2.2 per cent, respectively.  It suggested a target price of Rs 432 for HZL against Rs 451 earlier. The brokerage called HZL's valuations rich and said it would prefer attractive entry levels.

MOFSL said Hindustan Zinc's March quarter performance was been better than its estimates, aided by the company’s focus on cost control. HZL continued to focus on improving production with tight cost-control measures, it said adding that the brokerage has largely retained its earnings estimates for FY26-27 and expects Hindustan Zinc to sustain its profitability. 

"The favorable pricing scenario could also support the earnings. At CMP, HZL trades at 7.7 times FY27 EV/Ebitda, and we believe the current valuation prices in all positive factors. We reiterate our 'Neutral' rating with a target price of Rs 460 (premised on 8 times EV/Ebitda on FY27 estimates," it said.

HZL said its earnings before interest, tax, depreciation and amortisation (EBITDA) came in at Rs 4,816 crore, up 32 per cent YoY. The Ebitda margin expanded by 500 basis points to 53 per cent, driven by strong operational efficiency and effective cost management.

Analysts noted that Hindustan Zinc is in the final stages of preparing for the next phase of growth, wherein it plans to expand mined metal capacity from 1.2mtpa to 1.5 mtpa in the first phase by FY28 along with matching refined metal capacity. Thereafter, it would look to raise mined metal capacity to 2 mtpa. 

The details on the capex are likely to be revealed by July-August. The management is confident of a mine life 25-plus years even at expanded capacity, and does not foresee any risk to mines’ renewal after 2030.

Nuvama said Hindustan Zinc's Q4 Ebitda was better-than-expected due to lower refined zinc cost of production (CoP). Higher volume and lower zinc CoP offset lower zinc price, it said. 

"That said, we are cutting FY26E/27 Ebitda by 5.4 per cent/3.7 per cent to factor in lower zinc-lead and silver volume growth. We are factoring in a 9 per cent Ebitda CAGR over FY25–27E amid higher volume and lower CoP. The management is working on raising mined metal capacity in phases to 2 mtpa (1.5mtpa in first phase) over next five years. Valuing HZl at 8 times FY27E EV/Ebitda yields target of Rs 403 (earlier Rs 411); retain ‘REDUCE’," Nuvama said.