Hindustan Zinc shares jump 6% on FY27 demerger cue

Stock pops after management signals demerger back on agenda

Hindustan Zinc Ltd shares rose more than 6% on April 27 after the company indicated that groundwork for a potential demerger could begin in FY27. In late afternoon trade, the stock was quoted at Rs 627.65, up 6.65% for the day. The move put the stock among the top gainers in largecaps, with the company also cited as the second top gainer on the Nifty 100 index, after Sun Pharma.

The rally extends a strong run over the past year. Hindustan Zinc has gained 38.7% over one year, while the Nifty 50 was down about 1% over the same period. The day’s move follows a set of recent headlines on the company’s restructuring plans, its exposure to silver prices, and a series of operational and capital market updates.

CEO’s comment: groundwork may begin in FY27

The immediate trigger was CEO Arun Misra’s comments to CNBC-TV18 that the company is “re-looking” at its demerger proposal. He said some groundwork on a Hindustan Zinc demerger could begin in FY27. Misra also indicated that the group’s near-term focus remains on the broader Vedanta Ltd demerger process.

The company has previously discussed splitting businesses to unlock value. Reuters reported that Hindustan Zinc has been discussing the possibility of splitting into two units with the Indian government, which had opposed the proposal. Misra told Reuters the company would continue pursuing value creation through a demerger, regardless of whether the government proceeds with disinvestment.

Why silver is central to the demerger discussion

Silver is a key part of the investment debate around Hindustan Zinc. The update notes that the silver business is expected to contribute 50% of EBITDA going forward. In a separate interaction cited in the provided material, Misra argued that a demerger could widen the investor base by allowing different types of buyers to invest in a pure-play silver or zinc company.

The company is India’s only primary silver producer, according to the text. Its silver production increased more than 20 times over two decades, from 47 metric tonnes (MT) in FY03 to 687 MT in FY25, and the company plans to augment silver production to 750 MT by FY27.

Government stake and approval hurdle

A key structural issue is shareholder approval. The central government holds close to a 30% stake in Hindustan Zinc, and the text states that the company needs approval of a “majority” of the minority stakeholders to proceed. Earlier attempts to demerge did not materialise as the Ministry of Mines was not supportive.

Reuters also linked the government’s stance to a prior rejection of a similar proposal in March, stating the government was not convinced the move would boost shareholder value. The same report said the government had started roadshows to sell its stake in the miner.

Vedanta demerger context: a parallel process

The Hindustan Zinc update is unfolding alongside a larger corporate restructuring at the promoter level. The provided content states Vedanta Limited has received approval from shareholders and creditors to demerge into five independent, sector-specific listed companies. The voting outcome was reported as 99.99% of shareholders, 99.59% of secured creditors, and 99.95% of unsecured creditors in favour.

The plan aims to separate Vedanta’s businesses such as aluminium, oil and gas, power, and steel, while retaining Hindustan Zinc under Vedanta. Management’s sequencing matters because it affects timelines and attention for any Hindustan Zinc-specific separation.

Volatility check: silver price swings and sharp stock moves

Hindustan Zinc’s price action has been sensitive to silver. The text also references a separate session where the stock fell 7% and snapped a three-day streak as silver prices fell 9% and margins on MCX futures increased. In another instance, the stock rose over 4% even as silver prices posted a significant drop, highlighting how company-specific triggers can at times override commodity moves.

Over the past six months, one report in the provided material said the stock jumped 53%, supported by a broader rally in commodities such as silver and copper.

Operational performance and cost metrics cited

Operational momentum has also featured in recent updates. As per a regulatory filing referenced in the text, during Q3 of FY26 the company recorded its best-ever third-quarter mined metal production at 276 kt, driven mainly by higher ore production.

On earnings, another update said Hindustan Zinc reported a 46.2% rise in consolidated net profit to Rs 3,916 crore for the quarter ended December 31, 2025. Misra said the quarter delivered the highest-ever third-quarter metal production and the five-year lowest quarterly zinc cost of production of $140 per tonne.

Fund-raising watch: January 23, 2026 committee meeting

Apart from restructuring, investors have also tracked capital market actions. The company disclosed that a meeting of the committee of directors is scheduled for Friday, January 23, 2026, to consider and evaluate proposals for raising funds through listed non-convertible debentures on a private placement basis, subject to market conditions.

In that period, the stock traded sharply higher despite a weak broader market in one session, hitting an early high of Rs 699.30 on the NSE and ending around 3% higher near Rs 680, according to the text.

Snapshot: key numbers investors tracked

Broker and analyst views mentioned in the flow

The provided material also cited differing market views. Trendlyne data showed a consensus “HOLD” recommendation from 15 analysts, with an average target price of Rs 521.20, implying nearly 17% potential downside from those reference levels.

Separately, Jefferies initiated coverage with a Buy rating and a price target of Rs 660, pegged at 10x Sep-27E EV/EBITDA, and flagged risks such as lower silver and zinc prices, mine grades, mine renewals post 2030, and adverse related-party events.

What to watch next

The immediate data point for investors is whether the company provides a clearer roadmap on what “groundwork” in FY27 would mean in terms of structure, approvals, and sequencing with Vedanta’s broader demerger. The other swing factor remains silver, given management’s expectation that silver contributes half of EBITDA going forward and the stock’s sensitivity to sharp commodity moves.

Any formal next step will likely require more communication on the proposed split, stakeholder engagement with the government as a key minority shareholder, and updates on operational plans such as capacity additions and silver ramp-up targets.