Hindustan Zinc:
₹27,300 Cr Revenue. 72% ROE. Silver Goes Ballistic.
World’s 2nd-largest integrated zinc producer just posted record operating profit. Cost of production at 5-year lows. And everyone’s talking about silver—because zinc prices matter less when silver prices are hitting all-time highs.
The Miner That Prints Money When Metals Cooperate
- 52-Week High / Low₹733 / ₹385
- 9M FY26 Revenue₹27,300 Cr
- 9M FY26 PAT₹8,799 Cr
- Q3 FY26 EPS₹9.26
- TTM EPS (₹)₹27.67
- Book Value₹32.2
- Price to Book18.2x
- Dividend Yield4.94%
- Debt / Equity0.82x
- YTD Return (3-month)+17.8%
Welcome to the Underground Zincy Cash Machine
Hindustan Zinc is what happens when you put a global-tier mining operation in India, give it 75% market share in domestic primary zinc, and sit back while commodity prices swing wildly. Founded in 1966, it’s the world’s 2nd-largest integrated zinc-lead-silver producer. That’s not hyperbole. That’s ICRA-rated fact.
The company runs the world’s largest underground zinc mining operation at Rampura Agucha. It owns mines across Rajasthan. It operates smelters in Dariba, Chanderiya, and Debari. It refines silver at Pantnagar. And it’s been printing cash like a central bank on steroids since commodity prices decided to cooperate.
FY26 is shaping up to be something special. Q3 (Oct-Dec 2025) delivered record Q3 mined metal (276 kt), record Q3 refined metal (270 kt), and cost of production at a 5-year low. Silver prices rallied 75% year-over-year. And management’s concall in January 2026 had the tone of someone who’s been let loose in a candy store with unlimited credit.
But here’s the thing about mining companies: they’re cyclical. Commodity prices move. Operating leverage is a double-edged sword. In months when metals cooperate, HZL is a cash-generation machine. In months when they don’t, things get weird fast. Let’s dig into the latest numbers, the strategic moves, and why a 72% ROE isn’t as crazy as it sounds when silver prices are touching all-time highs.
Mining Without The Boring Academic Tone
Hindustan Zinc’s business model is deceptively simple: find zinc-lead ore in the ground, extract it via mining (mostly underground at Rampura Agucha), send it through smelters and refineries, and sell to customers. The company’s integrated setup means they control the entire value chain — from raw ore to refined zinc ingots, refined lead, and saleable silver as a valuable byproduct.
Revenue mix in FY25 was roughly 62% zinc, 14% lead, and 19% silver. That 19% silver component used to be a rounding error. Now it’s the profit engine. Silver prices hit all-time highs of $93/oz in January 2026, and HZL’s incremental silver production is going straight to the bottom line.
Domestic market share stands at ~75% for primary zinc — which means if you’re a galvanised steel producer (and 70% of Indian zinc goes to galvanising), you’re basically buying from HZL or crying. Exports account for 25% of turnover. The company has 1.2 MTPA of mining capacity and 913 ktpa of zinc smelting capacity. Running hard, generating cash, expanding capacity. The playbook is industrial, not sexy.
9M & Q3 FY26: Record Everything, Really.
Result type: Quarterly Results | Q3 FY26 EPS: ₹9.26 | Annualised EPS (Q3×4): ₹37.04 | TTM EPS: ₹27.67
Source table
| Metric (₹ Cr) | Q3 FY26 Dec 2025 |
Q3 FY25 Dec 2024 |
Q2 FY26 Sep 2025 |
YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue | 10,922 | 8,556 | 8,525 | +27.6% | +28.1% |
| Operating Profit | 6,005 | 4,458 | 4,426 | +34.7% | +35.6% |
| OPM % | 55% | 52% | 52% | +300 bps | +300 bps |
| PAT | 3,879 | 2,647 | 2,632 | +45.8% | +47.3% |
| EPS (₹) | 9.18 | 6.26 | 6.23 | +46.6% | +47.2% |
What’s the Right Price for a Cyclical Cash Machine?
Method 1: P/E Based (Normalised Earnings)
TTM EPS = ₹27.67. Mid-cycle P/E for global mining (8–12x) vs India small-cap premium (13x–18x). HZL’s ROCE of 60.7% and market dominance (75% zinc share) justify 14x–18x mid-cycle P/E. Fair P/E band: 13x–17x (being conservative on cyclical basis).
Range: ₹360 – ₹470
Method 2: EV/EBITDA Based
9M FY26 EBITDA = ₹14,415 crore. TTM EBITDA (annualised) ~₹19,000 crore (using management guidance). Enterprise Value at CMP = ₹2,58,981 cr. Current EV/EBITDA = 13.6x. Cyclical mining EBITDA multiples: 8–12x. HZL’s cost position and reserves justify 10x–13x band.
EBITDA range (10x–13x): ₹1,90,000 Cr – ₹2,47,000 Cr → Per share:
Range: ₹380 – ₹495
Method 3: DCF Based (Cycle-Adjusted)
Base FCF: ~₹8,000 crore annualised (9M data). Conservative assumptions: commodity price moderation, growth capex ramp ₹$300m+ annually. Terminal growth: 2% (cyclical industry). WACC: 10%.
→ Terminal Value (2% growth / 8% cap rate): ~₹1,90,000 Cr
→ Total EV: ~₹2,22,000 Cr (accounting for modest debt reduction)
Range: ₹395 – ₹520
The Expansion, The Silver Rally, And The Quietly Historic Moment
⚡ The 2X Growth Capex Is Now In Execution Phase
Management locked key EPC partners and started groundwork for both Debari integrated smelter (250 ktpa, target completion Q2 FY29) and Rampura Agucha tailings reprocessing plant (target Q4 FY28). This isn’t board-room fantasy anymore — it’s site clearing and engineering underway. Growth capex expected to run $300m in FY26, ramping further in coming years. Lead output expected to scale from 200 kt to 400 kt, mechanically lifting silver output to 1,300–1,400 tons annually (depending on silver ppm). Pantnagar refinery already built for 800 tons; may need expansion or new facility for incremental 600–700 tons. Long-term optionality is real.
✅ Silver is Now a Profit Centre
- • Silver contribution to profits hit 44% in 9M FY26
- • Silver prices rallied 75% YoY; touched $93/oz in Jan 2026
- • Fumer plant (silver recovery) now operating at ~60% capacity
- • Saleable silver: 451 MT in 9M (target 680±10 MT for FY26)
- • Strategic hedges in place: 56 tons FY27 at $58/oz; 68 tons FY26 at $39/oz
⚠️ Watch List: Cyclical Headwinds
- • Zinc costs rising structurally (deeper mining, dev cost inflation)
- • Safety incident at Rajpura Dariba in Q3 (investigation complete, corrective measures underway)
- • Mining lease expiry approaching 2030 (renewal terms unpredictable)
- • Commodity price volatility is geopolitical wildcard
- • Dividend payouts moderating (₹4,225 cr FY26 vs ₹12,253 cr FY25)
From Debt to Cash. In One Quarter.
Source table
| Item (₹ Cr) | Mar 2024 | Mar 2025 | Sep 2025 | Dec 2025 (Latest) |
|---|---|---|---|---|
| Total Assets | 33,904 | 34,418 | 35,474 | ~36,500 |
| Total Borrowings | 8,722 | 10,964 | 11,169 | ~10,500 |
| Cash & Equivalents | ~3,500 | ~3,200 | ~8,500 | ~10,800 |
| Net Debt / (Cash) | 5,222 | 7,764 | 2,547 | (329) |
| Equity + Reserves | 13,233 | 13,290 | 13,615 | ~14,000 |
Sep 2025 showed net debt of ₹2,547 cr. Dec 2025 flipped to net cash of ₹329 cr. All from operating cash generation. No asset sales. No rights issue. Just the mining machine running at max power.
Debt maturity in 4Q only ₹1,300 cr. Interest coverage at 17.3x (as of latest data). Basically, HZL has zero stress on debt servicing. Capex is entirely funding from operating cash, supplemented by market borrowings in measured doses.
Debt-to-equity ratio 0.82x. Equity strengthening with retained earnings. Promoter (Vedanta) still holds 61.84%. Government stake declining (was 29.54%, now ~27.92% post-divestment). Structural flexibility intact.
₹14,000+ Crore Operating Cash in 9 Months. Think About That.
Source table
| Cash Flow (₹ Cr) | FY24 | FY25 | 9M FY26 |
|---|---|---|---|
| Operating CF | +13,343 | +14,127 | +14,309 |
| Investing CF (Growth Capex) | -3,405 | -2,658 | -1,500 |
| Sustaining Capex | ~-3,000 | ~-3,200 | ~-2,400 |
| Financing CF (Dividends) | -9,946 | -11,426 | -4,225 (FY26 proj) |
| Free CF (post all capex) | ~+6,000 | ~+6,800 | ~+7,700 |
72% ROE Is Real. And It’s Cyclical.
Revenue Growth Driven By Price. Volume Growth Steady.
Source table
| Metric (₹ Cr) | FY23 | FY24 | FY25 | TTM* |
|---|---|---|---|---|
| Revenue | 34,098 | 28,934 | 33,969 | 36,211 |
| Operating Profit | 17,521 | 13,681 | 17,339 | 19,030 |
| OPM % | 51% | 47% | 51% | 52.6% |
| PAT | 10,520 | 7,787 | 10,279 | 11,691 |
| EPS (₹) | 24.90 | 18.43 | 24.33 | 27.67 |
*TTM = Trailing Twelve Months (includes 9M FY26 + 3M FY25). Revenue cycle: FY23 peak at ₹34,098 cr (high commodity prices), FY24 trough at ₹28,934 cr (prices corrected), FY25 recovery to ₹33,969 cr, and now TTM at ₹36,211 cr as silver prices surge. This is textbook commodity cyclicality.
HZL vs The Mining Lonely Hearts Club
Source table
| Company | TTM Revenue (₹ Cr) | TTM PAT (₹ Cr) | P/E | ROCE % | Commodity |
|---|---|---|---|---|---|
| Hindustan Zinc | 36,211 | 11,691 | 21.2x | 60.7% | Zn/Pb/Ag |
| National Mineral Dev | 8,900 | 730 | 24.5x | 22% | Rare Earths |
| Vedanta Ltd | 64,800 | 19,200 | 7.2x | 8.5% | Multi |
| Coal India Ltd | 48,650 | 13,500 | 7.8x | 18% | Coal |
| Goa Carbon | 1,850 | 670 | 18.2x | 35% | Graphite |
HZL’s 60.7% ROCE and 21.2x P/E premium reflect the commodity bull case. Parent Vedanta trades at 7.2x with 8.5% ROCE — that’s the conglomerate discount in action. Coal India at 7.8x shows the thermal coal undervaluation narrative. HZL is the premium-quality mining asset in the peer set. The question is whether that premium sustains through a downturn.
Who Actually Owns This Zinc Kingdom?
- Promoters (Vedanta Ltd)61.84%
- Government of India27.92%
- DIIs (incl. LIC portion)4.68%
- FIIs & Others5.56%
Pledged shares: 9.27% by Vedanta. Government is in slow-motion divestment (was 29.54%, now 27.92%). Public float expanding. Shareholder base: 7.93 lakh. Retail interest rising on commodity narrative.
Promoter: Vedanta Limited
Vedanta is a diversified natural resources company — iron ore, aluminum, zinc, copper, oil & gas, and power. Founded by Anil Agarwal. HZL is Vedanta’s crown jewel in terms of ROCE and free cash generation. Vedanta’s parent structure is complex; listed in India and London. Owns 61.84% of HZL (down from higher historical levels due to government divestment).
Government Stake Declining
GOI held 29.54% historically; now at 27.92% post-strategic divestment approved in 2022. Vedanta has been gradually increasing its stake, and GOI is exiting. In Jan 2026, Vedanta sold 3.35 crore shares (0.79%) via offer for sale. This trend will continue. No surprises here — PSU privatization playbook.
Running a World-Class Mining Op. It Shows.
✅ The Strengths
- ✓ World’s largest underground zinc mining operation
- ✓ ICRA ratings reaffirmed [ICRA]A1+ (short-term)
- ✓ S&P Global CSA ranked #1 (mining & metals) for 3rd consecutive year
- ✓ Best CSR in Private Sector (Mining Excellence Awards 2025)
- ✓ FY25 annual report won LACP Platinum, ranked #6 globally, #1 in India
- ✓ 25+ year reserve life at current mining rates
- ✓ Fully integrated operations (mining to refining)
⚠️ The Watch List
- ⚠ Fatal safety incident at Rajpura Dariba mine in Q3
- ⚠ Mining lease expiries approaching 2030 (renewal uncertainty)
- ⚠ Deeper mining leading to higher development costs
- ⚠ Royalty payment obligations to Rajasthan govt
- ⚠ Commodity price volatility is structural risk
- ⚠ Government stake still 27.92% (policy risk)
The Zinc Story In A Post-Commodity-Bull World
India’s primary zinc market is ~1.2 MTPA annually, growing at 5–7% driven by infrastructure, construction, automotive, and galvanising demand. HZL commands 75% market share, which is basically monopoly-lite in a growing market. Global zinc supply-demand has been tight, supporting prices. Silver, meanwhile, has been the hidden gem — until it wasn’t hidden anymore.
🏭 Galvanised Steel Tailwind: Evergreen Demand
Zinc’s primary use is galvanising steel (70% of Indian consumption). Infrastructure spending, railways, highways, power transmission, automotive — all require galvanised steel. This is structural, not cyclical. HZL’s 75% market share means they’re embedded in India’s growth story. When Adani builds a port, when NHAI lays a highway, when a car is manufactured — zinc is in the chain. The demand moat is underrated.
⚡ Silver as Strategic Asset (New Narrative)
Silver was a sidecar on zinc and lead. Now, with silver hitting all-time highs ($93/oz in Jan 2026), it’s becoming a profit centre. Driven by inclusion in U.S. critical minerals list, EV demand (solder), renewable energy (solar panels), and investment demand. HZL’s tailings reprocessing plant and fumer project are perfectly timed. If silver prices hold or rally further, this becomes a 200+ basis point margin uplift.
🌱 Renewable Power Integration: Cost Deflation Ahead
Power represents 35–40% of HZL’s operating costs. Management has signed power delivery agreements with Serentica Renewables for 450 MW across Dariba and Chanderiya (phased completion Apr 2024–Jun 2025). Current renewable mix: 20% (Q3 FY26), exiting FY26 at ~25%, ramping to 35–40% by FY27, and 70% by post-FY27. Estimated benefit: $20–$25/ton zinc COP saving. Structural margin improvement baked in.
🚨 The Inevitable Cycle Downturn
Zinc and silver prices are cyclical. In the last 10 years, we’ve seen peaks ($4,000+/ton zinc) and troughs ($1,200/ton). Management guidance of $950–$1,050/ton COP ex-royalty assumes a “steady-state” that may not materialize if prices crater. If zinc falls to $1,500/ton, margins compress and capex discipline becomes critical. HZL’s fortress balance sheet and low cost position are the only guardrails.
Competitive Landscape: HZL operates without meaningful domestic competition (75% market share). Imports from Korea, Japan, and others exist but face freight disadvantage. The real risk is not competitors but commodity price cycles and regulatory changes. Lease renewal in 2030 is a distant but real concern.
Government Divestment Context: GOI’s shareholding is declining (29.54% → 27.92%), and Vedanta continues to buy. Eventually, HZL may become a fully private company. PE ownership could accelerate capex plans and dividend moderation — actually a positive for long-term value creation.
The Zinc Cycle’s Apex Or The Calm Before The Storm?
Hindustan Zinc is a genuinely exceptional business operated during an unusually favourable commodity cycle. ROCE of 60.7%. ROE of 72.4%. 75% domestic zinc market share. Cost of production at 5-year lows. Silver contribution to profits at 44%. These aren’t typos or cherry-picked quarters. These are real, audited numbers. But they are also the output of a cyclical system running at peak capacity.
FY26 Execution (9M): Record ₹27,300 crore revenue. Record ₹8,799 crore PAT. Operating margin of 52–55%, sustainable only when metals cooperate. Silver rallied 75% YoY. Management is executing flawlessly — production ramp, cost control, 2x capex planning. The business is firing on all cylinders.
The Valuation Question: CMP ₹587 trades 12–15% above our fair value range of ₹360–₹520. This premium reflects the commodity bull narrative and genuine operational excellence. But cyclical assets historically don’t sustain these premiums through a downswing. The risk-reward at current levels is balanced at best, unfavourable at worst.
The Capex Story: ₹2x smelter expansions are real and moving from planning to execution. Debari (250 ktpa) targeting Q2 FY29 completion; Rampura Agucha tailings (target Q4 FY28) clearing regulatory approvals. Long-term structural growth capex is finally being deployed. This is positive for volume and optionality. Dividend payouts moderating (₹4,225 cr FY26 vs ₹12,253 cr FY25) to fund capex. Smart capital allocation.
Historical Context: In FY23 (peak), revenue was ₹34,098 crore at ₹10,520 crore PAT. In FY24 (trough), it dropped to ₹28,934 crore and ₹7,787 crore PAT. Now back to ₹36,211 crore (TTM) and ₹11,691 crore PAT. The recovery is real, but the cycle is also real. For income investors, this is paradise (4.94% dividend yield on top of price appreciation). For growth investors, timing the entry point matters.
✓ Strengths
- 75% domestic zinc market share — fortress moat
- 60.7% ROCE and 72.4% ROE — capital efficiency unmatched
- World’s largest underground zinc mining op
- 25+ year reserve life; R&R increased 35% in 5 years
- Silver now 44% of profits; tailwind from $93/oz prices
- ₹329 cr net cash position (flipped from debt in one quarter)
- Renewable energy transition reducing COP by $20–$25/ton
✗ Weaknesses
- Cyclical earnings — 72% ROE unlikely to sustain through downturn
- Zinc and silver prices are geopolitical/market dependent
- Mining lease expirations approaching 2030 (renewal terms uncertain)
- Deeper mining increasing development costs structurally
- Dividend payouts unsustainably high historically (119% of PAT in FY25)
- Government still holds 27.92% (policy risk, though declining)
→ Opportunities
- 2x smelter capacity (₹2,000+ cr capex) unfolding through FY29
- Silver recovery projects (Fumer, tailings reprocessing) scaling
- Data centre cooling fluids pilot (optionality, not core yet)
- Industrial lubricants adjacent play in infancy
- Galvanised steel demand growing 5–7% annually in India
- If Government divests fully, PE ownership could unlock value
⚡ Threats
- Zinc prices falling 30% overnight is possible (cyclical risk)
- Silver prices volatile; recent 75% rally attracts shorting
- Regulatory tightening on mining/environmental clearances
- Global zinc supply increases if mine production ramps elsewhere
- Capex execution risk on 2x smelter projects (₹5,000+ cr invested)
- Safety incidents (Rajpura Dariba) could impact operations/permits
Hindustan Zinc is not a boring business masquerading as exciting.
It’s an exciting business masquerading as boring. A mining company that prints 60%+ ROCE. Operates at the lowest cost position globally for zinc. Generates ₹14,000+ crore in annual operating cash. Commands 75% market share in a growing domestic market. And is now benefiting from a structural tailwind in silver pricing alongside normal zinc cycles.
But it’s also cyclical. The 72% ROE is the peak of the cycle. The ₹587 CMP is trading on the current commodity bull case. The fair value range of ₹360–₹520 assumes moderate commodity normalization. At current prices, the risk-reward is nuanced. For long-term investors with high risk tolerance and deep commodity understanding, this is a tier-1 quality asset. For short-term traders, wait for a pullback. For income investors, the 4.94% dividend yield is compelling, but understand the cycle.