Hindustan Zinc has delivered its strongest-ever quarterly performance, reporting a record profit after taxes of ₹3,916 crore for the third quarter, representing a 46% year-on-year growth. The Vedanta arm announced these exceptional results on Monday, showcasing the highest-ever quarterly topline and bottom line growth backed by robust operational performance and strategic positioning in the silver market.

Record Financial Performance Drives Market Leadership

The company achieved its highest-ever quarterly revenue of ₹10,980 crore, marking a substantial 27% increase year-on-year from ₹8,614 crore in the corresponding quarter of the previous financial year. Sequential growth was equally impressive with revenue rising 28% quarter-on-quarter, demonstrating consistent momentum across reporting periods.

Industry-Leading Operational Excellence and Silver Wave

Hindustan Zinc demonstrated exceptional operational efficiency with its highest-ever third quarter mined metal production of 276 thousand tonnes, representing a 4% year-on-year increase and 7% quarter-on-quarter growth. Silver production emerged as a key growth driver, reaching 158 tonnes with a 10% quarter-on-quarter jump, contributing 44% to profits and positioning the company to capitalize on the silver wave.

Cost Leadership and Margin Expansion

The company achieved its lowest quarterly zinc cost of production in five years at $940 per tonne, improving 10% year-on-year and 5% quarter-on-quarter. This cost optimization drove the industry-leading EBITDA margin of 55%, expanding approximately 320 basis points quarter-on-quarter and 270 basis points year-on-year, demonstrating superior operational efficiency.

Strategic Capacity Enhancement and Diversification

Hindustan Zinc successfully completed debottlenecking at Chanderiya Smelter, increasing refined zinc capacity by 21 thousand tonnes per annum, adding to the earlier commissioned debottlenecking at Dariba Smelter. The company was declared the successful bidder for the Tungsten Block in Balepalyam, Andhra Pradesh, marking strategic diversification into critical metals.

Strong Financial Position and Credit Rating

As of December 31, 2025, the company maintained robust liquidity with gross investments and cash equivalents of ₹9,342 crore invested in high-quality debt instruments. Total borrowings stood at ₹9,013 crore, resulting in a net cash position of ₹329 crore, compared to a net debt position of ₹2,547 crore as of September 30, 2025. The company maintains a consistent investment-grade credit rating of AAA from CRISIL, demonstrating balance sheet strength and delivered superior shareholder wealth creation at 5X of Nifty 100 and 2.4X of Nifty Metal returns.

Shares of Hindustan Zinc surged over 4% on Monday, reaching an intraday high of ₹663.00 after international brokerage HSBC upgraded the stock to Buy from Hold and set a target price of ₹750.00 per share. The upgrade, which implies an 18% upside potential, comes ahead of the company's Q3 earnings announcement. HSBC's revised outlook reflects improved metal price forecasts and stronger fundamentals across the metals sector.

HSBC's Upgraded Forecasts Drive Hindustan Zinc Rating

HSBC incorporated updated LME zinc and silver price forecasts into its analysis, raising FY2026-28 assumptions by approximately 5% to 23%. This revision led to a substantial 12% to 20% increase in EBITDA estimates for FY2027-28. The brokerage now values Hindustan Zinc at 11x FY27E EV/EBITDA, up from the previous 9.5x multiple.

The new valuation places Hindustan Zinc at the higher end of its five-year trading range of 5x to 11x EV/EBITDA. HSBC noted that this premium valuation reflects the company's strong balance sheet and a stable-to-improving outlook for LME zinc and silver prices. The brokerage highlighted further earnings upside potential from current spot LME zinc and silver prices.

Target Price Increases for Hindalco and NALCO

Alongside Hindustan Zinc, HSBC raised target prices for two other metal stocks. For Hindalco, the brokerage increased the target price to ₹1,240.00 from ₹1,060.00, implying a 33% upside potential. The revision follows EBITDA estimate increases of approximately 7% to 10% for FY2027-28.

HSBC factored in higher global LME aluminium and copper price forecasts for Hindalco, increasing FY2026-28 aluminium assumptions by about 5% to 16% and copper forecasts by around 5% to 20%. This drove the approximately 17% upgrade in the target price. The India business maintains a 7x FY27E EV/EBITDA valuation, representing a slight premium to its long-term average given the strong aluminium price outlook.

NALCO Benefits from Operational Improvements

For NALCO, HSBC raised the target price to ₹420.00 from ₹373.00, implying 16% upside, after increasing EBITDA estimates by around 16% for FY2027-28. The upgrade incorporates updated global LME aluminium and alumina price forecasts. The brokerage values NALCO at 7x FY27E EV/EBITDA, supported by its strong balance sheet and stable-to-improving aluminium price outlook.

HSBC highlighted improvements in NALCO's operating model, including:

• Start of captive coal mining operations
• Expected commencement of new captive bauxite mine
• Limited downside risk to alumina prices at current levels

Commodity Outlook and Market Performance

HSBC's optimistic stance reflects expectations of tight aluminium supply conditions, where any pickup in demand is likely to push prices higher. The brokerage raised its CY2026 and CY2027 LME aluminium price assumptions by around 16% and 14% to $3,200.00 per tonne and $3,250.00 per tonne, respectively, from previous forecasts of $2,750.00 and $2,850.00 per tonne.

The brokerage expects safe-haven metals and those with high exposure to energy-transition demand to continue outperforming metals with traditional demand exposure. HSBC has raised price forecasts for most metals on expectations of resilient demand, constrained supply, and a weaker US dollar, with platinum, copper, rhodium, and now aluminium as preferred metals.

In Monday's trading session, the upgraded stocks responded positively to HSBC's recommendations. Hindustan Zinc shares rallied over 4% to ₹663.00, Hindalco rose over 1% to ₹947.00, while NALCO gained nearly 2% to ₹376.00 on the BSE.