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Hindustan Zinc (HZL) is one of the world’s largest and India’s only integrated manufacturers of zinc-lead and silver. The company is India’s largest primary zinc producer, with around 77% market share including alloys and 80% market share without alloys.

Domestic brokerage and research firm HDFC Securities has recommended this metal stock as one of its top stock picks for 2022. Shares of Hindustan Zinc, leading zinc-lead miner, are up around 31% this year (year-to-date).

“High operating efficiency is driven by fully integrated operations (with a captive power plant capacity of 485.5 megawatts) and low-cost, high-grade zinc reserves and with access to the bulk of lead-zinc deposits in Rajasthan through long-term agreements with the Government of India, hence the company should sustain as a low-cost producer of zinc over the medium term," the note stated.

Hindustan Zinc is a subsidiary of Vedanta Ltd which owns a 64.9% stake in the company while the Centre retains a 29.5 per cent stake.

The Supreme Court's approval of disinvestment of the Centre’s residuary 29.5% share in the open market in November is expected to command better valuation, post disinvestment, as per the brokerage house.

Demand for zinc is very closely linked to the galvanized steel industry. The steel industry depends on the growth of end user industries such as automotive, consumer durables, batteries, home appliances, construction, and infrastructure. 

Any downturn in any of these industries will impact the demand for galvanized steel which could act as a key concern. The company also faces regulatory and environmental risks as all mines are clustered in Rajasthan, HDFC Securities highlighted.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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