Hindustan Zinc Limited disclosed to stock exchanges on January 02, 2026, regarding a significant facility agreement entered into by its related parties. The company received intimation under Regulation 30A of SEBI LODR from multiple related entities on January 01, 2026, at 09:58 PM IST.

Facility Agreement Structure

The facility agreement dated December 30, 2025, involves multiple parties within the Vedanta group structure, with Hindustan Zinc Limited not being a direct party to the arrangement.

Financial Terms and Purpose

The facility agreement provides for financing up to USD 80.00 million. The facility serves multiple specific purposes as outlined in the agreement terms.

Primary Uses of Facility:

• Part repayment of intercompany loan availed by Twin Star Holdings Limited from VRL Group
• Payment of interest and other amounts accrued on the intercompany loan
• Payment of interest, fees, costs and expenses related to the finance documents
• Ensuring no proceeds are routed to India

Operational Restrictions on Hindustan Zinc

While Hindustan Zinc Limited is not a direct party to the facility agreement, certain operational restrictions apply to the company effective from the first utilization date.

Key Restriction:

• Amendment of constitutional documents that affects lender rights or has material adverse effect under the facility agreement requires lender consent or must fall within permitted parameters

The facility agreement includes standard representations, warranties, and covenants typical for such transactions, along with customary events of default including non-payment, insolvency proceedings, and unenforceability provisions.

Impact Assessment

The restrictions become effective from the first utilization date as defined under the facility agreement terms. The company emphasized that the quantification of restrictions is not ascertainable due to their covenant-based nature rather than specific monetary obligations.

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.