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.

Hindustan Zinc has announced its refined metal silver production figures for the nine-month period, showing a notable decline in output compared to the previous year. The mining company's silver production performance reflects the operational challenges faced during this period.

Production Performance Overview

The company's refined metal silver production stood at 451 metric tonnes for the nine-month period, marking a significant decrease from the previous year's corresponding period. This decline represents a substantial reduction in the company's silver output capabilities.

Year-on-Year Analysis

The 12% decline in refined metal silver production translates to a reduction of 60 metric tonnes compared to the previous year's nine-month performance. This decrease highlights the operational challenges the company has encountered in maintaining its silver production levels during the current period.

The production figures indicate that Hindustan Zinc's silver operations have faced headwinds, with the company producing significantly less refined metal silver than in the comparable period of the previous year. The 451 metric tonnes achieved represents the company's current operational capacity and output efficiency in silver production.

Production Impact

The decline in silver production from 511 metric tonnes to 451 metric tonnes demonstrates the variability in mining operations and the challenges associated with maintaining consistent production levels. This reduction in output may impact the company's overall metal production portfolio and revenue generation from silver operations.