Hindustan Zinc Ltd’s (HZL) earnings are benefiting from three key factors: higher metal prices, lower cost of production (CoP) and improved volumes.
The September quarter (Q2FY27) results were strong, with year-on-year growth in revenue and earnings similar to Q1. Q2’s consolidated revenue rose a whopping 77% year-on-year to ₹15,100 crore. Operating leverage and a sharp drop in production cost meant Ebitda grew 108% to ₹9,250 crore.
Silver prices on LBMA averaged $62.6 per ounce (oz) in Q2, up nearly 60% year-on-year. Sales volumes rose 24% to 183 tonnes, including 10 tonnes in lead concentrate, following capacity augmentation through debottlenecking projects completed in H2FY26. H1 production of 340 tonnes was in line with FY27 guidance of 680 tonnes. However, the benefit from higher realizations could moderate from Q3FY27, with silver prices declining to around $58 per oz currently, close to the Q3FY26 average of $54.7 per oz.
Zinc prices also rose sharply, averaging $3,825 per tonne on the London Metal Exchange in Q2FY27, up 35% year-on-year. The market is seeing a sharp demand-supply mismatch, driven by mine closures and inadequate fresh investment. Prices have since fallen from a mid-September peak of about $4,200 per tonne to around $3,740 per tonne, which could limit the upside in Q3FY27.
Cost savings have also fuelled earnings. HZL’s zinc CoP, excluding royalty, fell 29% year-on-year to $703 per tonne in Q2 and to $776 per tonne in H1, aided by higher prices for the key by-product sulphuric acid and an increased share of renewable energy. Disruption in sulphur supplies amid the West Asia war has lifted sulphuric acid prices. Thus, the management has lowered its FY27 CoP guidance to $825-850 per tonne from $975-1,000 per tonne earlier.