Hindustan Zinc shares are expected to attract significant attention in Wednesday's trading session following a 6% decline in silver prices to approximately $73 per troy ounce. The drop comes as investors engaged in year-end profit booking near record highs, despite both silver and related metals remaining on track to close 2025 with historic annual gains.

Silver's Exceptional Performance in 2025

Silver has delivered remarkable returns of 157% in 2025, with prices surging to around $82 at spot levels. The rally has been driven by multiple factors including expectations of aggressive monetary easing, heightened geopolitical risks, and robust investment demand. Key triggers supporting the surge include low supply conditions, rising demand, and an easing monetary policy cycle by central banks globally.

Hindustan Zinc's Strategic Position

Hindustan Zinc holds a prominent position as one of the world's top five silver producers, with an annual production capacity of approximately 800 tonnes. Silver represents a significant profit driver for the company, contributing nearly 38% of its EBIT. This substantial exposure positions the company as a direct beneficiary of silver price movements.

The company has demonstrated strong stock performance, delivering gains of 41% in 2025 and 28% over the past month. With nearly 37% of its second half FY26 silver volumes hedged at $37, most of the upside from higher prices is expected to flow through in FY27, providing a meaningful boost to EBITDA.

Analyst Outlook and Projections

Jefferies initiated coverage on Hindustan Zinc with a Buy rating and a target price of ₹660. The brokerage views the company as a clear beneficiary of higher silver and zinc prices, supported by its first-decile zinc mining costs. While volume growth is expected to remain modest, earnings momentum is projected to stay strong.

The stock currently trades at 9.2x FY27E EV/EBITDA, above its long-term average of 7.3x. However, Jefferies believes this premium is justified given silver's rising share in overall profitability.

Operational Efficiency Improvements

Hindustan Zinc has achieved significant cost efficiency improvements. Zinc cost of production, excluding royalty, has declined from a peak of $1,257 in FY23 to $1,002 in the first half of FY26. This improvement has been driven by better ore grades, increased use of domestic coal, softer international coal prices, and a growing share of renewable energy.

The company has assumed conservative silver prices of $56-60 for the second half of FY26 through FY28, which are approximately 3-10% below prevailing spot levels. This conservative approach provides potential upside if silver prices remain elevated.

Market Outlook

Experts believe silver remains structurally well-supported despite entering a consolidation phase. Motilal Oswal Financial Services maintains a buy-on-dips approach with a staggered investment strategy. The firm notes that silver's 2025 rally is being driven by real metal scarcity rather than speculative positioning, with physical deficits, policy-driven supply restrictions, and concentrated inventories increasingly dictating prices.

Shares of Hindustan Zinc are expected to be in focus following silver prices surging to fresh lifetime highs, crossing the $75 per ounce mark globally for the first time. Silver has witnessed a year-to-date gain of over 140% in 2025, outperforming most asset classes driven by robust industrial demand, safe-haven buying, and persistent global supply constraints.

Silver Price Surge Drivers

The surge is being fuelled by heightened demand from sectors such as solar energy, electric vehicles, electronics, and investor optimism amid geopolitical tensions and expectations of monetary easing in the U.S. Vedanta Group Chairman Anil Agarwal highlighted the metal's strong rally, noting a 125% year-to-date gain in dollar terms.

Agarwal noted that silver has emerged from the shadow of gold to enter a long-term structural phase, fueled by technology-led demand from sectors such as solar cells and defence equipment.

Hindustan Zinc's Strategic Position

As one of the top five global silver producers, Hindustan Zinc is seen as a key beneficiary of this trend. The company has a production capacity of nearly 800 tonnes, with 38% of its EBIT directly linked to silver. As silver prices climb, analysts expect margin gains for the company, further supported by low mining costs and strong realizations.

Recent Financial Performance

For the September 2025 quarter, Hindustan Zinc reported a consolidated net profit of ₹2,649.00 crore, with silver contributing nearly 40% of overall profits, approximately ₹1,060.00 crore, marking a 19% sequential increase. The strong performance underscores the company's strategic positioning in the global silver market.

Technical Analysis Perspective

Historical analysis reveals Hindustan Zinc's chart shows one of the longest accumulation patterns dating back to the 1990s in the form of scalloped bottoms. This extended accumulation phase occurred as the Anil Agarwal group systematically acquired shares over nearly a decade before completing privatization in 2002.

The stock has demonstrated a clear stair-step pattern where prior price pivots acted as support during each decline, reflecting classic bullish price behavior. After reaching highs in May 2024, the stock fell sharply but has shown renewed correlation with silver's upward momentum.

Future Outlook

According to Jefferies, Hindustan Zinc's earnings outlook remains robust, with EPS projected to grow 22% in FY26 and 29% in FY27, followed by a 7% uptick in FY28. The brokerage sees upside potential in the stock, underpinned by silver's momentum and the company's cost-efficient operations.

The monthly chart analysis suggests the company may be approaching the end of a wave three advance and could enter a corrective phase, with silver also appearing close to projected targets in the $78-81 range.