Hindustan Zinc shares: Brokerage maintains 'Reduce' call after 'in-line' Q3; here's why

Hindustan Zinc Ltd reported an in-line operational performance for the December quarter (Q3 FY26), led by favourable commodity prices, higher volumes and lower costs. Despite the improved earnings profile, Nuvama Institutional Equities has reiterated its 'Reduce' rating on the stock, citing expensive valuations.

In its Q3 FY26 review, Nuvama said Hindustan Zinc posted EBITDA of around Rs 6,000 crore, marking a sharp 36 per cent quarter-on-quarter (QoQ) rise and slightly above its estimate of Rs 5,800 crore.

Silver continued to play a key role in earnings. Silver EBIT stood at Rs 2,290 crore, registering a 56 per cent QoQ jump on the back of higher prices. According to the brokerage, silver contributed nearly 44 per cent of total EBIT in Q3.

Nuvama highlighted the company's hedging strategy, noting that Hindustan Zinc has hedged around 7 per cent of its FY27 estimated zinc volumes at $3,117 per tonne and around 8 per cent of silver volumes at $58 per ounce. This, it said, offers downside protection against commodity price volatility.

The brokerage has revised its assumptions for average zinc and silver prices to $3,000/$2,900 per tonne and $60/$55 per ounce for FY27E/FY28E, respectively. These revisions are expected to lift EBITDA by about 28 per cent in FY27E and 21 per cent in FY28E.

Consequently, Nuvama raised its target price to Rs 591 per share from Rs 448 earlier, based on FY28E sum-of-the-parts valuation.

However, it continues to maintain a 'Reduce' call, stating that the stock trades at a relatively expensive valuation of 11.1 times FY28E EV/EBITDA.

Meanwhile, Hindustan Zinc shares gained 3.74 per cent on Monday, closing at Rs 661.20 on BSE.