Hindustan Zinc shares pare gains after 4% rally on strong Q2; what are the headwinds ahead?

Hindustan Zinc (HZL) shares rallied as much as 3.98% to the day's high of ₹559.85 apiece on the NSE in the early trade on Wednesday, October 21. The stock was in demand following the company's solid Q2 FY27 numbers that were released post-market hours on Monday.

However, the scrip retreated from the day's high in the morning trade. At 10:39 AM, the stock traded at ₹539.50 on the NSE, up 0.20%.

Vedanta group firm Hindustan Zinc Ltd on Monday reported a 142% rise in consolidated net profit to ₹6,412 crore for the quarter ended September 30, 2026 (Q2 FY27), driven by higher metal prices, increased production and a stronger dollar.

The company had posted a net profit of ₹2,649 crore in the year-ago period, Hindustan Zinc said in a filing to the BSE.

Its total revenue from operations increased 76.5% in Q2 FY27 to ₹15,093 crore from ₹8,549 crore logged in the year-ago period.

"Revenue from operations stood at ₹15,093 crore during the quarter, up 77% YoY, driven by higher metal prices, increased metal production, higher by-product realisation and a stronger dollar."

The company's EBITDA stood at ₹9,285 crore during the quarter, up 108% YoY.

"I am honoured to lead Hindustan Zinc at this pivotal stage. Our record quarterly mined metal production...and refined metal production...demonstrates the strength of our operations, assets and people," the company's Chief Executive Officer Amarendu Prakash said.

Other key details

The CEO said the company remains focused on disciplined growth, AI-led innovation and advancing its critical minerals portfolio to support India's energy transition while delivering long-term stakeholder value.

As of September 30, 2026, Hindustan Zinc had healthy gross investments and cash of ₹17,439 crore. Total borrowings outstanding as of September 30, 2026, stood at ₹6,171 crore.

Hindustan Zinc reported record second-quarter mined metal production of 2,71,000 tonnes, up 5% YoY. The company's refined metal production in Q2 rose 7% to 2,64,000 tonnes.

Silver production rose 20% year-on-year (YoY) to 173 tonnes, contributing significantly to Hindustan Zinc's profitability.

What analysts said

Analyst views on the stock remain divided as they flagged the sustainability of elevated metal prices, volatility in silver and the outlook for zinc prices as key factors that could influence its earnings and share-price performance.

Citi remains cautious on Hindustan Zinc, citing the possibility of moderation in zinc prices and limited further upside from prevailing spot prices of zinc and silver. The brokerage expects the physical zinc market to remain relatively balanced through 2027, which could constrain the scope for a sustained price rally.

Citi expects zinc prices on the London Metal Exchange (LME) to be around $3,700 per tonne in calendar year 2028, broadly in line with the prevailing spot price cited in its assessment. It also noted that silver, which accounts for around 50% of Hindustan Zinc’s EBITDA, could see further upside depending on an easing of macroeconomic conditions.

The outlook for silver is particularly important for Hindustan Zinc because changes in realisations from the metal can have a significant bearing on its profitability. Any moderation in zinc prices or a lack of sustained strength in silver could limit earnings momentum, even after the company’s strong quarterly performance.

Jefferies highlighted Hindustan Zinc’s strong September-quarter operating performance, noting that EBITDA rose 15% sequentially and came in 8% above its estimates. The brokerage raised its earnings-per-share estimate for FY27 by 5%, reflecting the company’s stronger near-term performance.

However, it cut its earnings estimates for FY28 and FY29 by 4% each, citing lower assumptions for silver prices. Jefferies noted that zinc prices have benefited from supply disruptions, while silver has remained volatile since June 2026.

The global investment bank also observed that Hindustan Zinc is trading below its long-term average enterprise value to EBITDA (EV/EBITDA) multiple.

A recovery in silver prices could therefore be an important factor in determining the stock’s performance.