🪞At a Glance
Hindustan Zinc isn’t your usual metal stock. It’s India’s Zinc Zameen Zindagi combo — a cash-spewing, ultra-profitable, silver-slinging dividend magnet where even the government wants a piece of the pie. But with pledges at 93.5%, and 5-year revenue crawling at 13% CAGR, the big question: Is HZL a compounding machine or a glorified ATM for its promoters?
🧠 Part 1: Zinc Daddy of India (And the World)
Some context for the newcomers:
- 🏆 75% domestic zinc market share
- 🌍 3rd largest silver producer globally
- 🛢️ Fully backward integrated, massive reserves
- 🔌 100% captive power
- 🏭 Mega plants across Rajasthan
HZL is what happens when a government monopoly meets Vedanta-style capital efficiency (and corporate drama).
📊 Part 2: 5-Year Financials – Consistently Rich, Occasionally Cursed 😅
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 22,629 | 29,440 | 34,098 | 28,934 | 33,969 |
| EBITDA (₹ Cr) | 11,672 | 16,226 | 17,521 | 13,681 | 17,296 |
| EBITDA Margin | 52% | 55% | 51% | 47% | 51% |
| PAT (₹ Cr) | 7,980 | 9,630 | 10,520 | 7,787 | 10,279 |
| ROCE (%) | 26% | 37% | 50% | 46% | 61% |
| Dividend Payout % | 113% | 79% | 303% 😳 | 71% | 119% |
🎯 TLDR: Cash cow. Fat margins. Doles out dividends like SBI doles out education loans.
💣 Part 3: The Dividend Addiction is Real
Let’s talk numbers:
- 💸 FY23: ₹75 per share dividend
- 💸 FY24: ₹18 per share
- 💸 FY25: ₹30+ including June’s ₹10 interim
Over 3 years, that’s ₹123 per share, or 25% of today’s price.
So is this a growth stock? Or a metal-themed mutual fund in disguise?
HZL’s payout ratio has exceeded 100% in 3 of the last 5 years, often borrowing or dipping into reserves to do so.
🧻 Part 4: The Promoter Drama — Vedanta vs. Government 🎭
Two heavyweight shareholders:
- Vedanta Ltd: 64% stake, with 93.5% pledged
- Government of India: 29.5%
- Both love dividends — for totally different reasons
While Vedanta milks it to repay debt and fund buybacks, GoI uses it as a budget band-aid.
In April 2023, the Centre blocked HZL’s plan to buy THL Zinc from Vedanta. “Conflict of interest,” it said.
So yeah, Hazratganj-level drama, but in boardrooms.
🏗️ Part 5: Expansion — Zinc 2.0 or Just PR?
Just this month:
🛠️ ₹12,000 Cr capex announced
⚙️ Goal: Increase zinc capacity by 250 KT at Debari plant over 36 months
🔋 Focus: Energy efficiency + integrated smelting + automation
Sounds cool. But wait — where’s the revenue growth?
- 5-year CAGR revenue = 13%
- 3-year CAGR PAT = 3%
- FY24 sales were lower than FY23 😬
They’ve got growth ambitions. But execution? Jury’s out.
⚠️ Part 6: Red Flags? Yes, Even in Udaipur 🌉
| 🚩 Red Flag | Status |
|---|---|
| 📉 Revenue dipped in FY24 | -15% vs FY23 |
| 💣 93.5% promoter shares pledged | Risky leverage |
| ⚠️ Dividend payout > 100% in multiple years | Unsustainable? |
| 🧑⚖️ GoI-Vedanta conflict | Strategic uncertainty |
| 💰 Book Value ₹31 vs Price ₹486 | P/B = 15.5x 😳 |
That’s not a valuation. That’s an Ambani wedding gift.
💰 Part 7: Fair Value – How Much for a Zinc ATM?
Let’s get rational for a sec.
- FY25 EPS = ₹24.33
- Avg 5-year PE = ~14x
- Assign fair PE: 14–16x (high margin but zero growth stock)
| Scenario | EPS | P/E | FV |
|---|---|---|---|
| Base Case | ₹24 | 14x | ₹336 |
| Bull Case | ₹24 | 16x | ₹384 |
🎯 EduInvesting Fair Value Range = ₹336 – ₹384
CMP = ₹486
💥 That’s 26%–30% overvalued, even after pricing in juicy dividends
🛍️ TL;DR – HZL in a Sentence?
“If dividends were crack, Hindustan Zinc would be Pablo Escobar.”
- 💸 Dividend yield = 6%
- 🧾 ROE = 73% 🤯
- ⚒️ Monopoly in zinc, dominance in silver
- 💣 93.5% shares pledged, GoI always watching
- 🧮 Revenue flat, but margins are king
- ⚠️ Stock is overvalued at 15.5x P/B
🧠 Verdict:
Hindustan Zinc is not your average metal stock — it’s a wealth distribution machine disguised as a mining company. If you’re hunting for growth, run. But if you love consistent dividends and don’t mind the Vedanta–GoI circus, this could be your yield play.
Just remember: this ATM doesn’t always refill automatically.
✍️ Written by Prashant | 📅 June 18, 2025
Tags: Hindustan Zinc stock review, zinc market India, dividend yield stocks, Vedanta pledge issue, HZL fair value, EduInvesting, metal monopoly, government vs promoters, high ROE stocks
