142.1% profit growth: Why Hindustan Zinc still trades near its 52-week low

Hindustan Zinc is among the world’s leading integrated Zinc producers. In addition, it is also amongst the top 10 global silver producers.

Here is an insight on the factors driving the company’s record financial performance.

The Silver Engine: How 103% Price Surge Powered 43% of Segment Earnings

Hindustan Zinc sold 173 tonnes of refined silver in the second quarter of FY27, a rise of 17% y-o-y.

Of equal importance, in its results presentation, the company has highlighted an average international price of silver of $ 62.6 per ounce as compared to $ 39.4 an ounce, a rise of 59% y-o-y. Global silver prices grew in the quarter on account of ‘safe haven’ status for this precious metal amidst US government debt crossing a record $ 40 trillion coupled with no signs of easing in the Middle East crisis.

In the local market, average spot silver prices were nearly Rs 2.4 lakh per kilogram as compared to Rs 1.18 lakh per kg a year ago, a rise of 103% y-o-y. Part of the rise in local silver prices can be attributed to higher import duties imposed by the central government earlier this year.

Silver prices had peaked at Rs 3.18 lakh in the third week of January, 2026.

Hedging at $60/oz: Why Strategic Locks Cap Spot Upside

Silver prices in the quarter were significantly higher on a y-o-y basis. However, in its annual report for FY26, Hindustan Zinc has highlighted that as part of its risk management framework, it undertakes strategic hedging for a portion of its annual production, within policy limits, to support greater predictability of revenues, EBITDA, and cash flows, and to mitigate adverse price movements.

In line with this practice, the company hedged 59 tonnes of silver at an average price of $ 60 per troy ounce. The above position is intended to provide protection against price volatility, the company has highlighted.

Hindustan Zinc sold 627 tonnes of silver in FY26.

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 rise in silver prices right away.

Strong silver prices coupled with a rise in refined silver sold helped Hindustan Zinc’s silver division revenues rise 140.8% y-o-y to Rs 4,111 crore in the quarter. Also, segment profit of the silver business grew 146.5% y-o-y to Rs 3,609 crore in the quarter.

September 2026 quarter – strong performance for Hindustan Zinc

Source- Screener.in, company results and investor presentation, and global financial websites

The silver segment accounted for 27.2% of the company’s consolidated revenues in the quarter. However, it made up 43.1% of total segment profit of Rs 8,365 crore in the quarter.

Core Industrial Base: Zinc Operating Profit Surges 120.8% on LME Rebound

The company’s refined zinc sales were 214,000 tonnes in the quarter, a rise of 6% y-o-y. The company is the world’s leading integrated zinc producer.

Importantly, the average LME price was $ 3,825 per tonne in the quarter, a rise of 35% y-o-y. Demand for zinc on a global basis is being driven by electric vehicles, construction galvanizing and infrastructure expansion.

Also, refined lead sales were 51,000 tonnes in the quarter, a rise of 14% y-o-y. However, the average LME price of $ 1,857 per tonne, was 6% lower on a y-o-y basis. Demand for lead is driven globally by lead acid batteries for auto sector and data centre UPS back-up, amongst others.

However, strong performance of the key zinc business helped revenues of this division rise 59.5% y-o-y to Rs 10,414 crore. Segment profit of this division also grew 120.8% y-o-y to Rs 4,720 crore.

Strong performance of the silver and zinc division helped the company’s consolidated revenue from operations rise 76.5% y-o-y to Rs 15,093 crore in the quarter, and net profit also rose 142.1% y-o-y to Rs 6,412 crore.

The RoE Asymmetry: What Hindustan Zinc’s 76.6% Return Masked Against Peers

Hindustan Zinc has a consolidated return on equity (RoE) of an impressive 76.6%, according to Screener.in.

Other leading non-ferrous players like Hindalco Industries has a 13% consolidated RoE.

Capital efficiency – Hindustan Zinc is ahead of rival

Source – Screener.in

Commodity Price Tailwinds: Can Elevated Spot Levels Sustain Into H2?

Spot silver prices in Mumbai are currently at Rs 2.29 lakh per kilogram, and they are about 35% higher on a y-o-y basis compared to the average price of October 2025.

Zinc prices on the LME are currently at $3725 per tonne, and are about 18% higher on a y-o-y basis as compared to the average price of October, 2025.

Also, demand for silver, zinc and lead is broadly strong, and is being tracked closely by investors.

Valuation Floor: Why a 10.7x Multiple Failed to Prevent Earnings Day Selling

Hindustan Zinc declared its results after the close of Monday trade, and on Wednesday, the stock fell 2.4% to Rs 524.8 despite the strong financial performance. The stock had hit a 52-week low of Rs 453.5 on 24 November, 2025.

Investors are growing increasingly nervous with the broad volatility in spot silver prices, and its potential impact on the company’s net profit growth, going forward. However, Hindustan Zinc has a strategic hedging policy to minimize the impact of volatile spot silver prices.

Hindustan Zinc trades at a consolidated P/E of 10.7, according to Screener.in, and over the past 5 years, this stock’s P/E has varied between 10.4 times and 40.4 times.

Valuation Grid

Source – Screener.in

Other leading non-ferrous stocks like Hindalco trade at a consolidated P/E of 9.5, and over the past 5 years, its P/E has varied between 5.4 and 16.4.

Stocks in the metals sector tend to be very volatile since they are very exposed to the fluctuations in the global economy. Hindustan Zinc is trading close to the lower end of its valuation band, and readers could add the stock to their watch list for 2026.

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.

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