Hindustan Zinc shares surged as much as 3.2% to an intraday high of ₹627.00 on Monday, January 12, tracking a sharp rally in silver prices after the precious metal hit a fresh record high of $83.56 per troy ounce. Safe-haven demand strengthened amid escalating geopolitical tensions and concerns over Federal Reserve leadership.

Silver Price Rally Drives Performance

Silver March futures on the MCX traded 3.9% higher at ₹2,62,650.00 per kilogram, gaining ₹9,925.00 from the previous close. The metal's surge was attributed to safe-haven demand following escalating tensions between the US and Iran, along with reports of potential criminal indictment threats against Federal Reserve Chair Jerome Powell by the Trump administration.

Company's Silver Exposure

Hindustan Zinc ranks among the world's top five silver producers, with significant exposure to the precious metal's price movements. The company's silver operations contribute substantially to its profitability profile.

Technical and Analyst Outlook

From a technical perspective, analysts maintain a constructive view on the stock's trajectory. Ajit Mishra, SVP at Religare Broking, noted that the stock has resumed its broader uptrend after brief consolidation, with rising volumes confirming the strength of the move.

Technical Levels:

• Support Zone: ₹560.00-580.00 (key trend support)
• Upside Target: ₹650.00-680.00
• Medium-term Support: ₹540.00-550.00

International brokerage firm Jefferies initiated coverage with a Buy rating and target price of ₹660.00 per share, representing 9% upside from current levels. The stock has already gained 11% over the past month.

Operational Efficiency Improvements

Hindustan Zinc has demonstrated significant cost efficiency improvements in recent periods. The company's zinc cost of production (excluding royalty) declined substantially from peak levels.

The cost reduction was driven by multiple factors:

• Better ore grades
• Higher use of domestic coal
• Softer global coal prices
• Rising contribution from renewable energy

Growth Projections

Jefferies projects strong earnings expansion despite modest volume growth expectations. The brokerage expects costs to remain largely range-bound through FY26-28E, as efficiency gains and increased renewable power usage offset pressures from deeper mining and ore grade variability.

EPS Growth Projections:

• FY26: 22% growth
• FY27: 29% growth
• FY28: 7% additional increase

The company's FY26-28 EPS estimates are 9-31% higher than Street expectations, supported by strong cash generation and healthy return on equity. While the stock trades at 9.2x FY27E EV/EBITDA above its long-term average of 7.3x, the valuation is considered justified given silver's rising contribution to overall profitability.

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.