Everyone talks about gold, but these two silver stocks are well placed for 2026
Silver's sharp rally has reshaped its role from a cyclical metal to an earnings driver. Two Indian stocks now offer direct and indirect leverage—but valuation comfort may be narrowing.
Silver has been mined for nearly 5,000 years, yet for much of modern financial history, it has lived in gold's shadow. In periods of macro uncertainty, investors rush towards safe-haven gold. Silver, however, has often been viewed as volatile, industrial, and cyclical. That narrative, however, has begun to change meaningfully over the past year.
In fact, during 2025, silver prices surged by around 150% to ₹218,918 per kg, outperforming gold's 79% return. Over the past five years, silver's 231% gain has also outpaced gold's 173% return. This rapid increase has once again brought silver into the spotlight. At the core of this shift is silver's dual character.
It functions both as a precious metal and as a critical industrial input. During early phases of an economic upcycle, rising industrial demand tends to amplify silver's upside, often allowing it to outperform gold. Conversely, it underperforms when growth slows. The current phase of the cycle appears to be playing out in silver's favour.
Fundamentals support the price move. According to the World Silver Survey 2025, the global silver market remained undersupplied for the fifth consecutive year, with an estimated deficit of 117.6 million ounces in 2025. This is mainly driven by increasing industrial demand for electric vehicles (EVs), renewables, and electronics, while supply growth remained modest. Macroeconomic conditions have added further support.
Investor participation has also broadened. According to the Silver Institute, holdings in silver-backed exchange-traded products surged in 2025, with net inflows of about 95 million ounces in the first half alone, bringing total global holdings to around 1.13 billion ounces, near the highest level since early 2021. Silver relative undervaluation to gold has also aided the rally. With silver demand expected to remain above supply, silver prices are expected to stay strong.
On Indian bourses, there are two stocks that benefit directly from rising silver prices:
Hindustan Zinc: Silver is no longer a by-product
If there is one company that stands to benefit meaningfully from sustained strength in silver prices, it is Hindustan Zinc (HZL). HZL is India's only integrated and listed primary silver producer and now ranks among the top five silver producers globally. Its ranking has increased from 23rd position (2014) and 9th (2018), reflecting HZL's growing foothold in silver production.
As of FY25, the company reported combined silver resources and reserves of 808.4 million ounces. The Sindesar Khurd mine remains the backbone of this portfolio and is currently the world's fourth-largest silver-producing mine.
Over the past two decades, HZL has expanded silver output by more than 20x, reaching 687 metric tonnes (MT) in FY25. This underscores how silver has moved from being incidental to becoming central to the company's operating profile.
From by-product to core engine
This shift is visible in HZL's financials. Silver has evolved from a by-product into a strategic profit centre, shielding against volatility in base metal prices. In FY25, the precious metals portfolio recorded strong growth, aided by rising domestic market penetration. Notably, HZL sold 100% of its silver production volume of 687mt in the domestic market during the year, highlighting both pricing power and depth of demand.
HZL expects to produce 700 tonnes of silver in FY27. In the revenue mix, silver accounted for 18% ( ₹6,135 crore) of HZL's FY25 revenue of ₹34,083 crore. The share increased further to 19% in H1 of FY26. Precious metals also contributed 38% to Ebit in FY25, rising to 41% in the first half of FY26. This shows that silver is emerging as an even more important factor for earnings momentum.
Monetizing the silver upcycles
In Q2 FY26, HZL produced 144mt of silver, with demand remaining strong enough for the entire output to be sold within the quarter. Silver revenue rose 10% year-on-year and 20% sequentially to ₹1,706 crore in Q2FY26. Silver accounted for 20% of HZL revenue during the quarter.
This performance was supported by a sharp 30% year-on-year rise in silver prices to $46.7 per troy ounce during the quarter ended September. The operating leverage from silver is also playing out. Silver accounted for roughly 40% ( ₹1,060 crore) of HZL's profitability ( ₹2,649 crore), making it a meaningful contributor to earnings.
With silver prices rising a further 57% between October and 24 December to $71.8, HZL profitability is likely to see a meaningful uplift in Q3FY26. Management has indicated that the full impact of the current price rally is yet to be reflected in earnings, suggesting further value unlock potential. HZL's share price is also up 35% to ₹625 in the last one month, showing potential earnings growth.
Management also believes HZL is well-positioned to benefit from the ongoing silver upcycle, as global industrial demand continues to outpace supply, creating a structurally tight market. To capitalise on pricing, HZL has redirected operational focus toward the Sindesar Khurd mine. It is incentivising contractors to prioritise high-grade silver stopes in the second half of FY26.
Path to 1,500mt capacity
Looking ahead, HZL has guided for refined silver production of 680mt in FY26. Beyond volume stability, the company is investing in recovery-led growth. The hot-acid leaching plant, designed to extract silver from smelting waste, is expected to be commissioned in 4QFY26. It is estimated to add around 27mt of annual silver production.
In addition, under the Fumer Technology Initiative, operations at the Chanderiya complex are being ramped up to recover silver and lead from jarosite. The combined incremental silver output from the fumer and the leaching plant is expected to be 50–60 tonnes per annum. These expansions align with HZL's goal of reaching annual silver capacity of 1,500 MT by FY30.
Vedanta: Hindustan Zinc is the primary engine
Unlike HZL, Vedanta does not produce silver directly. It benefits from the silver theme entirely through its majority ownership in HZL. As discussed above, HZL has steadily evolved into one of the world's largest primary silver producers. As a result, Vedanta's exposure to the silver upcycle is indirect, but increasingly material.
HZL is Vedanta's most profitable operating asset, and silver has become a key earnings driver within HZL. As silver's contribution to HZL's profitability has expanded, the metal has begun to influence Vedanta's earnings more than in the past. This linkage has strengthened further as silver prices have moved sharply higher in Q2 FY26.
When silver moves the needle
According to Emkay, Vedanta's silver exposure remains underappreciated by the market. With minimal hedging in place for FY27, HZL is positioned to capture price-led upside more fully. Emkay estimates that a $1-per-ounce up move in silver prices expands HZL's Ebidta by 1%.
With silver prices rising by nearly $25 per ounce during Q3, HZL's Ebitda could increase by about 25%. Given that HZL contributes around 40% to Vedanta's consolidated Ebitda, the silver price rally will have a meaningful impact on Vedanta's overall earnings trajectory. Vedanta's share price is also reflecting the expected earnings improvement.
Mirroring HZL's share price, Vedanta's stock has gained around 18% to ₹598 over the last one month. However, the growing influence of HZL in Vedanta's portfolio has also made the stock more sensitive to silver price movement. At the group level, Vedanta is also approaching a structural inflexion point.
The proposed demerger into five separate listed entities could unlock value for shareholders. While Vedanta carry elevated debt, with Q2 FY26 net debt at ₹62,000 crore, leverage metrics are improving. Net debt-to-Ebitda has declined from 1.55x (as of FY24) to 1.37x in Q2FY26. This is expected to fall to 1.1x by FY27, aided by stronger cash flows and dividends from subsidiaries. This will directly boost Vedanta's bottom line.
That said, after a parabolic move in silver prices, the risk of a near-term correction cannot be ruled out. The gold-to-silver ratio has also declined to around 65, close to its long-term average of 60-65.
Historically, such levels suggest that silver is no longer materially undervalued relative to gold. This implies that a major portion of the re-rating may already be behind us. Thus, any correction in silver prices could lead to earnings downgrades and valuation derating for both companies.
For more such analysis, read Profit Pulse.
Madhvendra has over seven years of experience in equity markets and writes detailed research articles on listed Indian companies, sectoral trends, and macroeconomic developments.
The writer does not hold the stocks discussed in this article.
The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
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