Hindustan Zinc Q3 FY26: Profit Soars 46% on Record Revenue

Introduction

Hindustan Zinc Ltd (HZL), a subsidiary of Vedanta, announced a record-breaking performance for the third quarter of the fiscal year 2026. The company achieved its highest-ever quarterly revenue and net profit, driven by robust production volumes, favorable commodity prices, and significant operational efficiencies. This strong showing has placed the stock in focus, with investors and analysts closely watching its trajectory. The results underscore the company's strong market position and its ability to capitalize on positive industry trends.

A Record-Breaking Quarter in Detail

For the quarter ending December 31, 2025, Hindustan Zinc reported a consolidated net profit of ₹3,916 crore, marking a substantial 46% increase compared to the ₹2,678 crore posted in the same period last year. On a sequential basis, the profit after tax (PAT) surged by 48%. The company's total revenue from operations also set a new benchmark, reaching ₹10,980 crore. This represents a 27% year-on-year (YoY) growth from ₹8,614 crore and a 28% quarter-on-quarter (QoQ) increase, highlighting strong momentum in its business operations.

Operational Excellence Drives Performance

The foundation of HZL's financial success in Q3 was its exceptional operational performance. Mined metal production for the quarter stood at 276 kilotonnes (Kt), a 4% increase YoY and a 7% rise QoQ, marking its highest-ever output for a third quarter. This growth was complemented by a significant reduction in operational expenses. The company reported its lowest cost of production in five years, at $140 per tonne. This figure is 10% lower than the previous year and 5% better than the preceding quarter, showcasing remarkable efficiency gains.

EBITDA and Margin Expansion

Reflecting the strong revenue growth and cost control, Hindustan Zinc's Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) reached a record ₹6,087 crore. This was a 34% jump YoY and a 36% increase QoQ. More impressively, the company achieved an industry-leading EBITDA margin of 55%. This represents an expansion of 270 basis points (2.7%) compared to the previous year and 320 basis points (3.2%) from the last quarter, indicating superior profitability and operational leverage.

The Crucial Role of Silver

Silver production played a pivotal role in HZL's stellar quarter. The company produced 158 metric tonnes (MT) of silver, a 10% increase from the previous quarter. The precious metal's contribution to overall profits was significant, accounting for 44% of the total. This positions Hindustan Zinc uniquely to benefit from the ongoing strength in global silver prices, which have seen a significant rally. The company's status as India's largest silver producer allows it to effectively ride this wave, adding a valuable dimension to its earnings profile.

Key Financial Metrics: Q3 FY26 Performance

Financial Health and Strategic Initiatives

Hindustan Zinc's balance sheet also strengthened during the quarter. The company transitioned from a net debt position of ₹2,547 crore as of September 30, 2025, to a net cash position of ₹329 crore by December 31, 2025. Total outstanding borrowings stood at ₹9,013 crore. Furthering its growth ambitions, HZL successfully completed the debottlenecking at its Chanderiya Smelter, which increased refined zinc capacity by 21 Ktpa. The company was also declared the successful bidder for a Tungsten Block in Andhra Pradesh, diversifying its mineral portfolio.

Analyst Perspectives and Market Reaction

The strong quarterly performance prompted a positive review from international brokerage HSBC, which upgraded the stock to 'Buy' from 'Hold' and raised its target price to ₹750 per share. HSBC cited updated forecasts for LME zinc and silver prices, leading to a 12-20% increase in its EBITDA estimates for FY2027-28. The brokerage now values HZL at a higher multiple, reflecting its strong balance sheet and an improving outlook for metal prices. However, the broader analyst community remains divided, with recommendations from 14 analysts spanning from 'Strong Buy' to 'Strong Sell', indicating a mixed outlook on its future valuation.

Stock Performance and Valuation

Shares of Hindustan Zinc have delivered strong returns to investors over the past year, gaining over 42%. The stock trades at a PE ratio of approximately 23.95 with a market capitalization of ₹2,79,040 crore, making it the largest company in the non-ferrous metals sector in India. The company also offers a healthy dividend yield of around 4.34%, which adds to its appeal for income-focused investors. The recent performance has pushed the stock price closer to its 52-week high, reflecting the positive market sentiment following the results.

Conclusion

Hindustan Zinc's Q3 FY26 results have set a new performance standard for the company, with record-breaking figures across revenue, profit, and operational metrics. The combination of higher production, disciplined cost management, and favorable commodity markets, particularly for silver, has created a powerful earnings engine. While the company's strategic initiatives and strong financial health paint a positive picture for the future, investors will likely weigh this against the stock's current valuation and the mixed consensus among market analysts.