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Hindustan Zinc Limited (HINDZINC) : Comprehensive Stock Analysis Report | Scrolls

by KarNivesh | 13 August, 2025


Hindustan Zinc Limited (HINDZINC) is India’s largest and the world’s second-largest integrated zinc producer, making it a key player in the global metals and mining industry. Despite recent volatility, the company’s exceptional profitability, strong market share, and ambitious expansion plans make it a notable contender for long-term portfolios.

Corporate office building of Hindustan Zinc Limited in Udaipur with well-kept green lawns under a clear sky.
Corporate office building of Hindustan Zinc Limited in Udaipur with well-kept green lawns under a clear sky.

Company Overview

Founded in 1966 and headquartered in Udaipur, Rajasthan, Hindustan Zinc commands a dominant 77% share of India’s primary zinc market and is among the world’s top five silver producers, with an annual capacity of 800 tonnes. Its vertically integrated operations span mining, milling, smelting, and refining across six locations in Rajasthan and Uttarakhand, including the Rampura Agucha mine—the world’s largest underground zinc mining operation.

Hindustan Zinc Stock Price Performance (2023-2025) with Moving Averages
Hindustan Zinc Stock Price Performance (2023-2025) with Moving Averages

Recent Developments

In August 2025, Hindustan Zinc became the first Indian company to join the International Council on Mining and Metals (ICMM), joining 25 global leaders committed to sustainable mining. This reinforces its ESG leadership, with the company committing to 40 performance expectations covering environment, social responsibility, and governance.

The company also reported record quarterly alloy production and its highest-ever first-quarter mined metal output of 265 KT in Q1 FY26.


Financial Highlights

As of August 2025, Hindustan Zinc’s market cap stands at ₹1,81,477 crore. The balance sheet is healthy, with ₹9,340 crore in cash and investments and total borrowings of ₹13,524 crore.


Profitability remains a standout feature:

  • ROE: 72.4%

  • ROCE: 60.7%

  • Operating Margin: ~51%

  • Net Profit Margin: 29%


Q1 FY26 performance:

  • Revenue: ₹7,771 crore (down 4.4% YoY)

  • Net Profit: ₹2,234 crore (down 4.7% YoY)

  • EBITDA Margin: 49.6%

  • Lowest-ever zinc cost of production: $1,010/tonne


Shareholding Pattern

  • Promoters (Vedanta Ltd): 61.84% (down 1.58% QoQ)

  • Government of India: 27.92%

  • Retail Investors: ~32%

  • FII Holding: 1.36%


However, a concern is that 92.3% of promoter holdings are pledged, potentially signaling liquidity needs or strategic restructuring. Reports suggest Vedanta may sell up to ₹7,500 crore worth of shares via block deals, which could affect short-term sentiment.


Valuation and Peer Positioning

At ₹430.25 per share, Hindustan Zinc trades at:

  • P/E: 17.9

  • P/B: 13.7

  • Dividend Yield: 6.85%

While priced at a premium to some peers like Vedanta (P/E 12.5), the premium is justified by its industry-leading profitability. The current price is 30% below its 52-week high of ₹618, potentially offering value for patient investors.


Stock Performance

  • 1-Year Return: +35.1%

  • 2025 YTD: -3.1% (reflecting commodity price pressures)

  • Trading below 50-day and 200-day moving averages, with RSI at 43—indicating neither overbought nor oversold conditions.


Growth Strategy

Hindustan Zinc has a ₹12,000 crore

Phase-1 expansion plan to increase refined metal capacity by 250 KTPA within 36 months.Long-term goal:

  • Double metal production capacity to over 2,000 KTPA.

  • Increase silver production to 1,500 tonnes in five years.


Phase-2 plans include:

  • 450,000 tonnes zinc smelting.

  • 200,000 tonnes lead smelting.

  • 750,000 tonnes silver refining.

With India’s zinc demand expected to double in 5–10 years due to infrastructure growth, the company is well positioned for sustained demand.


Key Risks

  1. Commodity Price Volatility – Earnings are sensitive to zinc, lead, and silver price swings.

  2. High Promoter Pledging – Increases risk of forced sales and governance concerns.

  3. Regulatory and Environmental – Mining operations face strict compliance requirements.

  4. Concentration Risk – Heavy reliance on zinc and the Indian market (75% revenue).


Why Investors Should Watch Hindustan Zinc

Strengths:

  • Dominant market share and cost leadership.

  • Exceptional profitability and dividend yield.

  • Clear capacity expansion roadmap.

  • Industry tailwinds from infrastructure and steel demand.


Considerations:

  • Stock is cyclical; timing matters.

  • Monitor promoter pledging closely.

  • Best suited for medium-to-long-term investors with moderate-to-high risk tolerance.


Hindustan Zinc combines market leadership, strong financials, and ambitious growth plans, making it a strong candidate for investors bullish on India’s infrastructure and industrial growth. While short-term risks like commodity price swings and high promoter pledging exist, the stock offers attractive long-term potential—especially for those willing to ride out the cycles.

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