Hindustan Zinc's operating revenue surged 77% year-on-year to ₹13,747 crore in the June quarter (Q1FY27). Ebitda more than doubled to ₹8,074 crore—its highest ever. But the stock declined marginally post results, taking the loss to 12% so far in 2026. What gives?
The answer lies in what drove the earnings surprise. Higher commodity prices and currency movements took Q1FY26 Ebitda of ₹3,860 crore to ₹7,666 crore adjusted Ebitda in Q1FY27, which further rose to ₹8,074 crore due to higher volumes and lower costs.
Sure, the company clocked $851 per tonne in Q1FY27 as the cost of zinc production, excluding royalty—the lowest since its underground transition. This was driven by better mined grades, 4% higher refined metal production, better renewable power consumption, and higher by-product realizations, partly offset by lower domestic coal usage and increased input commodities prices.
While some of these factors are structural long-term efficiency compounders, the primary tailwinds—higher metal prices and a weaker rupee—are expected to weaken going forward.
As the Reserve Bank of India’s measures to attract foreign capital gain traction, the rupee is not likely to depreciate at the pace seen over the past year. A stronger or even stable rupee would moderate the currency conversion gains enjoyed by exporters such as Hindustan Zinc.
Commodity prices also seem to be approaching an inflection point. As projects ramp up and previously idle mines restart, global mined zinc supply is expected to improve, which can cap further price increases even as demand remains resilient on the back of energy transition and domestic infrastructure push.
While domestic demand for zinc is expected to jump from 0.89 million tonnes (mt) in 2026 to 1.01 mt by 2028, its London Metal Exchange price is likely to moderate from $3,379/tonne to $3,038/tonne. Lead has remained largely flat over the past year.
Commodity prices
Of the three metals Hindustan Zinc is present in, prices of silver, which contributed 46% of the company’s Q1FY27 Ebitda, were the most volatile during the quarter. Compared to $84.3/troy ounce in Q4FY26, the April price stood at $75.8, which rose to $77.8 in May, and dropped to $66.7 in June.
Hindustan Zinc's own sensitivity analysis shows that earnings remain highly leveraged to commodity prices. Every $100/tonne fall in zinc price is expected to affect Ebitda by ₹725-750 crore, while every $1/troy ounce drop in silver price can result in a ₹200-225 crore Ebitda hit. So, a downturn in the metal cycle could mitigate the benefits from incremental production or further cost efficiencies.
To be sure, the company's zinc production costs are one of the world’s lowest, providing a meaningful cushion if prices soften. It also plans to double its mined metal capacity to 2 mt annually, invest in renewable power to structurally lower energy costs, strengthen its critical minerals portfolio and expand into fertilizers. These initiatives can widen the company's cost edge, while diversifying its business beyond zinc and silver.
That said, the stock trades at 9 times EV/Ebitda based on FY28 Bloomberg consensus. This prices in much of the optimism around record earnings and generous dividends.
If commodity prices normalize faster than expected, earnings could moderate even though the company's operations continue performing well. The next few quarters may depend less on what happens inside the mines and more on what happens in global metal markets and currency movements.