Hindustan Zinc Stock Soars 53% on Record Q3 FY26 Profit

Introduction

Hindustan Zinc Ltd's shares surged to a new 52-week high of ₹699.35, marking a significant rally in an otherwise subdued market. The stock's impressive performance, including a 53% appreciation in just two months, follows the company's announcement of record-breaking financial results for the third quarter of the financial year 2025-26. The strong earnings were driven by a combination of higher production volumes, favorable commodity prices, and disciplined cost management, reinforcing investor confidence and prompting positive revisions from market analysts.

A Landmark Quarter for Hindustan Zinc

The October-December quarter (Q3 FY26) proved to be a historic one for the Vedanta Group company. Hindustan Zinc reported its highest-ever quarterly revenue, crossing the ₹10,000 crore mark for the first time. Revenue from operations stood at ₹10,980 crore, a substantial 27% increase year-on-year (YoY) and a 28% rise quarter-on-quarter (QoQ). This growth was primarily fueled by a recovery in volumes and strong prices for its key metals, particularly silver.

The company's profitability saw even more remarkable growth. Net profit (PAT) soared by 46% YoY to ₹3,916 crore. Similarly, Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) grew 35% YoY to ₹6,087 crore, comfortably surpassing analyst estimates. The EBITDA margin expanded to 55.1%, up from 52.2% in the corresponding quarter of the previous year, highlighting improved operational leverage.

Operational Excellence Underpins Success

The record financial figures were supported by robust operational performance. The company achieved its highest-ever third-quarter mined metal production. A key achievement was the reduction in the cost of production for zinc, which fell to a five-year low of $140 per tonne. This cost efficiency was a result of higher renewable energy usage, better ore grades, and other operational improvements.

The management reiterated its production guidance for the full financial year 2026, expecting refined metal output to be between 1,075 and 1,100 kilotonnes (kt). Silver production guidance was also maintained at approximately 680 tonnes. The company anticipates further cost improvements in the final quarter of the fiscal year, driven by ongoing efficiency measures.

The Strategic Importance of Silver

A significant factor contributing to Hindustan Zinc's stellar performance is its position as a leading global silver producer. The precious metal now accounts for approximately 44% of the company's Earnings Before Interest and Taxes (EBIT), providing a substantial earnings cushion and downside protection against volatility in base metal markets. The sharp rally in global silver prices, driven by industrial demand from sectors like renewable energy and electronics, has directly translated into higher revenues and margins for the company. This growing contribution from silver is reshaping Hindustan Zinc's earnings profile, making it a key beneficiary of the structural upcycle in the silver market.

Key Financial Highlights: Q3 FY26 vs Q3 FY25

Analyst Perspectives and Market Reaction

The strong quarterly results led to positive commentary from several brokerage firms, although some expressed caution regarding the stock's high valuation after its recent run-up. JM Financial Institutional Securities maintained a 'Buy' rating and raised its target price to ₹770, citing the company's low-cost operations and the rising contribution from silver. Motilal Oswal Financial Services reiterated a 'Neutral' rating but increased its target to ₹720, acknowledging the strong performance and long-term visibility from expansion plans but noting that near-term upside may depend on LME price movements.

Emkay Global Financial Services highlighted that Hindustan Zinc's balance sheet has shifted to a net cash position of ₹330 crore, a positive indicator of financial health. The market responded enthusiastically to the results, with the stock rallying 10% in the three trading days following the announcement and continuing its upward trajectory.

Potential Risks and Forward Outlook

While the outlook for Hindustan Zinc appears constructive, its performance remains closely linked to the global commodity cycle. Any significant downturn in zinc, lead, or silver prices could impact future earnings. Investors also note that a large portion of the promoter's holdings are pledged, which can be a risk factor during periods of market volatility. However, the company's long-term strategy, which includes doubling its existing capacity, provides a clear roadmap for future growth and enhances long-term earnings visibility.

Conclusion

Hindustan Zinc's record-breaking third-quarter performance demonstrates its operational strength and strategic advantage in the current commodity environment. The combination of record production, five-year low production costs, and significant leverage to rising silver prices has created a powerful earnings tailwind. While the stock's valuation reflects much of this positive news, the company's solid fundamentals and clear expansion plans position it well to capitalize on future market opportunities.