Hindustan Zinc shares extended their winning run for the second consecutive session, surging 4.5% as silver prices scaled fresh record highs amid renewed geopolitical tensions and a sharp retreat in the US dollar. The metal stock opened higher at ₹624.80 and maintained momentum throughout the session.

Stock Performance and Silver Contribution

The company's shares reached a day's high of ₹632.55, marking significant gains from recent lows. The stock has demonstrated strong performance, gaining 57% from August lows based on the current high levels.

Silver's importance to Hindustan Zinc's financial performance has grown substantially. The metal now contributes 41% to the company's earnings before interest and taxes (EBIT) in H1FY26, representing a significant increase from approximately 28% in FY23. This enhanced contribution makes the current silver price rally particularly beneficial for the company's operating performance.

Silver Prices Reach Record Highs

Silver prices achieved multiple record highs, crossing the ₹2.65 lakh mark during the trading session. The March delivery silver futures contract on MCX opened the week with a substantial jump of ₹12,665 per kilogram, reaching a fresh record high of ₹2,65,390.

In international markets, spot silver prices strengthened by 6% to reach a fresh peak of $84.58 per ounce. This contributed to an 18% surge in January, following a 148% increase in 2025.

Market Outlook and Price Targets

Motilal Oswal expects the silver price rally to continue in 2026, setting ambitious targets for both domestic and international markets. The brokerage maintains a "Buy on Dips" stance for silver throughout 2026.

The brokerage indicates that silver's strength is likely to be front-loaded in the first half of 2026 amid policy uncertainty and currency volatility. The continuation of the rally in the second half will depend on global growth cues, bond market stability, and monetary policy credibility.

Geopolitical Factors and Dollar Weakness

The safe-haven appeal of precious metals has been reinforced by multiple geopolitical developments. Tensions around China-Japan trade relations, US capture of Venezuela's leader, fresh tariff-related tensions, and a criminal probe into Federal Reserve Chair Jerome Powell have supported the rally.

Middle East tensions have also intensified, with anti-government protests in Iran's capital Tehran amid an internet shutdown and government crackdown. The US dollar fell significantly, with prosecutors opening a criminal investigation into Federal Reserve Chair Jerome Powell, adding to tensions with the administration.

The weakening dollar makes dollar-priced commodities cheaper for holders of other currencies, providing additional support to precious metal prices. Recent US jobs data delivered mixed signals on economic health, providing little clarity on the future path of Federal Reserve rate cuts.

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.