Hindustan Zinc shares: Vedanta arm gets 15% upside target, HZL stock up 6%, here's why

Hindustan Zinc Ltd (HZL), which is promoted by Vedanta Ltd, was trading nearly 6 per cent higher in Wednesday's trade after the government raised customs duty on silver to 15 per cent from 6 per cent earlier. Hindustan Zinc is among the top five silver producers globally. On Wednesday, the HZL stock gained 5.54 per cent to hit a high of Rs 677.10, with SBI Securities recommending a 'Buy' on the stock.

The eighth largest domestic brokerage in terms of active clients in FY26 finds Hindustan Zinc's valuation attractive. It set a target of Rs 748 for 12-years, hinting at 15 per cent upside over Tuesday's closing price. Vedanta owned 60.71 per cent stake, or 2,56,52,71,353 HZL shares. as of March 31.

"The government’s push on infrastructure is driving robust steel demand which is expected to reach 300 million tonnes (mt) by CY30, which would require 2 mt of demand for Zinc and Lead in India itself. This positions Hindustan Zinc to be a key beneficiary given it is the world’s largest integrated producer of zinc," it said.

SBI Securities said Hindustan Zinc has secured 3 critical mineral blocks- including Tungsten in Andhra Pradesh, whose composite license is received and exploration got started in Q4.

"At the CMP of Rs 648, the stock trades at FY27/FY28 Bloomberg consensus EV/Ebitda multiple of 10 times/9.6 times, respectively. Key risks include  unfavourable changes in Zinc & Silver prices; Delay in capacity expansion," it said.
     
Meanwhile, Vedanta shares were also trading 5.46 per cent higher at Rs 321.70. In a note on recent royalty cuts on oil exploration, CLSA said the government has announced flat deduction at 15 per cent for all blocks other than nomination blocks. This will drive down royalties for all Vedanta's Rajasthan field from 16.67 per cent to 10.6 per cent.

"Similarly, it will also bring down royalties on many other fields to further encourage exploration and the development of upstream production in India. Specifically for blocks offered after 2019 under the new Hydrocarbon Exploration Licensing Policy (HELP), rates have been further reduced to attract fresh investment in the upstream oil & gas sector," it noted.