Hindustan Zinc Reports Robust Q2FY26 Profit Driven by Higher Zinc and Silver Prices, Announces Significant Capex

Hindustan Zinc demonstrated strong financial performance in the second quarter of fiscal year 2026 (Q2FY26), with its operating profit rising by 7.8% compared to the same period last year. This growth was primarily driven by elevated prices for zinc and silver, coupled with reduced operational costs and a marginal increase in mined metal production. Silver prices reached a record high of $48 per ounce, while zinc prices saw a nearly 10% surge, supported by global trade tensions and tight supply, which significantly bolstered the company's earnings. However, following a weaker output in the first half of FY26, Hindustan Zinc has revised its mined metal and silver production guidance downwards. Looking ahead, the company has earmarked approximately $400 million for capital expenditure in FY26, focusing on growth initiatives. Key projects include the 250,000 tonnes per annum (KTPA) smelter project at Debari, with an estimated cost of ₹12,000 crore and a target completion in Q2 FY29, and the zinc tailings project, costing ₹3,800 crore and slated for completion by Q4 FY28. Analysts maintain a positive outlook on Hindustan Zinc, anticipating continued strength from firm metal prices, tightening global silver supply, and growing zinc demand fueled by India's expanding steel industry. The company's cost efficiency, keeping zinc production costs around $1,000 per tonne, along with its ambitious capacity expansion plans, further solidifies its growth trajectory. Consequently, financial estimates have been revised upwards: FY26 revenue is projected to increase by 3.2% and EBITDA by 4.5%, while FY27 estimates are raised by 5.5% and 6.3%, respectively. The company is now valued at a 12x EV/EBITDA multiple on an FY27 EBITDA estimate of ₹20,600 crore (previously ₹19,400 crore), leading to a revised target price of ₹580, up from ₹553. Impact: This news is highly significant for Hindustan Zinc investors, as it confirms strong operational performance, outlines major growth investments, and indicates improved financial forecasts. The positive outlook and increased target price suggest potential upside for the stock. The company's strategic capex plans for capacity expansion are crucial for meeting future demand. Impact Rating: 8/10 Difficult terms: * Q2FY26: Second quarter of the fiscal year 2026, typically from July to September 2025. * Operating profit: Profit generated from a company's normal business operations before interest, taxes, depreciation, and amortization. * y-o-y: Year-on-year, comparing data from one period to the same period in the previous year. * Zinc and silver prices: The market value of the metals zinc and silver. * Mined metal production: The quantity of metal extracted from ore before further processing. * Guidance: Future financial or operational targets provided by a company. * KTPA: Kilotonnes Per Annum, a measure of production capacity or output, equivalent to 1,000 tonnes per year. * Smelter project: A facility where metal ores are smelted to extract the pure metal. * Zinc tailings project: A project focused on processing waste material (tailings) from zinc mining to recover valuable minerals or manage environmental impact. * FY26/FY27: Fiscal year 2026 and Fiscal year 2027. * EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. A measure of a company's operating performance. * EV/EBITDA multiple: Enterprise Value to EBITDA. A valuation ratio used to compare companies within the same industry. * Target price: The price at which an analyst believes a stock should trade in the future.