Hindustan Zinc’s stock jumped almost 6% on Wednesday, taking its 2026 return into positive territory at almost 3%. The rally came on two triggers. First, Jefferies India raised its target price to ₹750 from ₹660, citing a better outlook for zinc and silver. Second, reports cited that DIPAM is not looking at a government-led stake sale in Hindustan Zinc at present. This eased speculation after Hindustan Copper’s recent offer-for-sale (OFS).
But after a 19% rally in a month, what matters is whether the commodity tailwinds can sustain Hindustan Zinc’s earnings from here.
While the bull case has strengthened since Hindustan Zinc’s blockbuster Q1FY27 results, it comes with caveats. The company itself cited Woodmac’s projections, which placed London Metal Exchange (LME) price for zinc at $3,180/tonne by 2027 and at $3,038/tonne the next year, down from $3,379/tonne in 2026. Silver, which contributed 46% of the company’s Ebitda in Q1FY27, had fallen sharply from $84.3 to $66.7/troy ounce between Q4FY26 and June.
Price boost
Against this expectation, the recent uptrends in zinc and silver have lifted sentiment. Spot zinc prices are now 15% above the June-quarter average – a 4-year high, while silver has recovered 23% from its July lows.
Zinc has been supported by multi-year-low inventories, negative treatment charges, mine suspensions in China, and concerns over sulphur availability following a fire at a sulphuric acid plant in South Korea.
Jefferies has consequently raised FY27-FY29 earnings per share (EPS) estimates by 10-11%, and expects another 12% upgrade in FY28 if current spot zinc and silver prices persist. To be sure, the broking firm’s estimates are 16-23% above consensus. S&P Global has upgraded zinc prices by an average 2.5% across its forecast horizon.
Silver question
Silver’s outlook is less straightforward.
S&P expects another year of physical deficit, with structural demand from AI infrastructure, electronics and electrification supporting consumption. Still, the rise is expected to be slower than previously expected, and consensus price targets have been revised down for every year of its forecast horizon. Jefferies is more bullish, expecting further gains amid persistent inflation and stable near-term interest rates.
This is to say that the near-term outlook has improved, but the medium-term picture has not necessarily been rewritten. Woodmac expects the refined zinc market to move from a 79 kt deficit in 2026 to surpluses of 237 kt and 322 kt in 2027 and 2028. If China’s exports recover and sulphur supply concerns ease, the near-term rally will give way to moderation in zinc prices.
Earnings sensitivity
This distinction matters because Hindustan Zinc’s earnings are highly sensitive to commodity prices. Every $100 per tonne change in zinc prices affects Ebitda by ₹725-750 crore, while every $1 per troy ounce move in silver affects Ebitda by ₹200-225 crore. The company clocked ₹8,074 crore in Ebitda in Q1FY27 on ₹13,747 crore of revenue.
Sure, the company has some protection against a possible medium-term commodity downturn. Zinc production cost fell to a record-low $851 per tonne in Q1FY27, while higher mined grades, debottlenecking, and renewable power should provide structural benefits.
But at 9.2 times EV/Ebitda based on consensus Bloomberg FY28 estimates, the stock trades at a premium, which poses a risk if zinc and silver prices normalize.