Hindustan Zinc reported a 142% jump in Q2 FY27 profit to INR 64.1 billion, driven by strong operational efficiency. However, Motilal Oswal has maintained a neutral stance with a Rs 600 target, noting that the current market price likely reflects the positive production and commodity price trends, leaving limited room for further immediate gains.
Hindustan Zinc delivered a strong financial performance for the second quarter of the 2027 fiscal year, benefiting from favorable commodity prices and production gains. The company reported a revenue of INR 151 billion, which is a 77% increase compared to the same period last year. Profitability also rose significantly, with net profit surging 142% to INR 64.1 billion. The operational performance was equally robust, with the company reporting an EBITDA of INR 92.5 billion, representing a 108% jump year-on-year, alongside a healthy EBITDA margin of 61.3%.
A key driver behind these numbers was improved operational efficiency, particularly in controlling production costs. The company managed to reduce the zinc cost of production, excluding royalty payments, to USD 703 per tonne in the second quarter, down from USD 851 per tonne in the previous quarter. Analysts have pointed to better ore grades and higher returns from byproducts as the main factors supporting this cost reduction. These operational gains have helped the company withstand volatility in global energy markets and domestic coal supply issues.
Despite the positive quarterly results, brokerage firm Motilal Oswal has maintained a neutral stance on the stock, setting a price target of Rs 600. The rationale provided by the brokerage centers on the company’s current market valuation. With the stock trading at a 6.4x FY28E EV/EBITDA multiple, the research note suggests that investors have already factored in the company’s recent production success and the current commodity price environment. In simple terms, the market may have already pushed the stock price to a level that accounts for much of the expected growth, making further significant upside less likely in the near term.
Investors looking at Hindustan Zinc must consider the cyclical nature of the business. The company’s performance is closely tied to global zinc and lead prices, which are influenced by international demand and economic conditions. While the company has shown success in managing internal costs, external factors like commodity price shifts and energy costs remain primary risks. The market’s assessment of a 7x EV/EBITDA multiple for fiscal year 2028 indicates that analysts are expecting the company to maintain its current momentum, but also that there is little room for error at current price levels.
Moving forward, the key monitorables for shareholders will be the company’s ability to sustain these cost efficiencies and production volumes in coming quarters. Investors may watch for future updates on global zinc price trends and any changes in the domestic supply chain that could impact production margins.