Hindustan Zinc Q3 Profit Soars 46% on Record Production

Introduction to Q3 Performance

Hindustan Zinc Ltd (HZL), a subsidiary of the Vedanta Group, announced a robust financial performance for the third quarter of fiscal year 2026, significantly surpassing market expectations. The company's success was underpinned by a combination of record production volumes, favorable commodity prices, and a notable reduction in operational costs. This convergence of positive factors led to its highest-ever quarterly revenue and profit, reinforcing its strong position in the non-ferrous metals industry. The market responded positively, with the company's stock price surging to a new 52-week high following the results announcement.

Detailed Financial Breakdown

The company reported a standalone net profit of ₹3,879 crore for the quarter ending December 31, 2025. This represents a substantial 46.5% increase compared to the ₹2,647 crore profit recorded in the same period of the previous year. The reported profit comfortably exceeded analyst estimates, which had projected a net profit of around ₹3,493 crore. Revenue from operations also saw a significant year-on-year rise of 27.5%, reaching ₹10,922 crore from ₹8,556 crore. This figure also surpassed the Street's estimate of ₹10,219 crore, highlighting a stronger-than-anticipated topline performance.

Operational Excellence and Cost Management

Hindustan Zinc's operating performance was equally impressive. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) grew by 34.7% year-on-year to ₹6,055 crore, beating the analyst consensus of ₹5,614 crore. The EBITDA margin expanded to 55% from 52% a year ago. This improvement was largely attributed to a lower zinc cost of production and enhanced operating leverage. A key highlight of the quarter was the company's success in cost reduction. The zinc cost of production, excluding royalty, dropped to a five-year low of $140 per tonne. This represents a 10% year-on-year decrease and was achieved through lower power costs and higher realizations from by-products.

Record Production Volumes

Operationally, the quarter was marked by several milestones. HZL achieved its highest-ever third-quarter mined metal production at 276 kilo tonnes (kt), a 4% increase year-on-year. Refined metal production also set a new record at 270 kt, up 4% from the previous year. This growth was driven by the successful commissioning of debottlenecking projects and better plant availability. The growth in output was a critical factor behind the record revenue figures, demonstrating the company's ability to scale its operations effectively.

The Growing Importance of Silver

Silver production has become an increasingly vital component of Hindustan Zinc's financial success. During the quarter, silver output rose 10% sequentially, and the segment contributed a remarkable 44% to the company's overall profits. This performance was aided by stronger silver prices in the global market. The company's position as one of the world's top silver producers allows it to capitalize on periods of high demand and favorable pricing for the precious metal, providing a significant boost to its bottom line.

Key Financial Highlights for Q3 FY26

Market Reaction and Stock Performance

Investors responded with strong optimism to the stellar earnings report. Following the announcement, Hindustan Zinc's shares extended their gains, trading over 4% higher on the National Stock Exchange at approximately ₹664. The stock has delivered a return of over 42% in the last year, significantly outperforming the NSE Nifty 50 index, which has risen by about 10% during the same period. This performance reflects strong investor confidence in the company's operational capabilities, financial health, and strategic direction.

Peer Landscape and Analyst Outlook

In comparison to its peers, Hindustan Zinc's performance stands out. For instance, while HZL posted a 46% profit growth, its parent company Vedanta reported a decline in the same period. This highlights HZL's superior operational efficiency. Analyst sentiment has turned increasingly positive, with brokerages like HSBC upgrading the stock to a 'Buy' rating and raising target prices ahead of the results. The consensus among 14 analysts shows a mixed but improving view, with a growing number of 'Buy' recommendations.

Conclusion and Forward Look

Hindustan Zinc has delivered an exceptional quarter, setting new records for revenue and profit. The performance was a result of a well-executed strategy focusing on maximizing production, controlling costs, and leveraging strong commodity prices. With its robust operational metrics, disciplined cost management, and a strong market position in both zinc and silver, the company is well-positioned to continue its growth trajectory. Future performance will likely depend on the company's ability to maintain this operational momentum while navigating the dynamics of global commodity markets.