- Net profit jumped 46% YoY to ₹3,916 cr, a record for the company.
- Revenue hit a fresh high of ₹10,627 cr, up 28% YoY.
- EBITDA margin surged to 55%, the highest in the Indian metals space.
- Precious metals now contribute 44% of earnings, driven by a 10% QoQ rise in silver output.
- Production costs fell to a five‑quarter low of $940 per tonne, sharpening cost leadership.
You missed Hindustan Zinc’s profit surge, and your portfolio may be paying for it.
Hindustan Zinc, the flagship mining arm of Vedanta, delivered its strongest quarter ever in Q3 FY26. The company posted a consolidated net profit of ₹3,916 crore, a 46.22% year‑on‑year jump, and revenue surged to ₹10,627 crore—both records for the miner. The catalyst? A perfect storm of soaring silver prices, robust zinc demand, and a disciplined cost‑cutting regime that drove EBITDA to ₹6,087 crore and pushed the margin to an industry‑leading 55%.
Why Hindustan Zinc’s Margin Surge Beats Sector Trends
The metals sector has been grappling with volatile commodity prices and rising input costs. Yet Hindustan Zinc’s EBITDA margin expanded by 270 basis points YoY, outpacing peers like Tata Steel and Adani Enterprises, whose margins have stagnated around the 30‑35% range. Two forces underpin this outperformance: (1) a five‑quarter low production cost of $940 per tonne, achieved through debottlenecking at the Chanderiya and Dariba smelters, and (2) a premium silver price rally that lifted precious‑metal by‑product earnings to 44% of total profit.
Silver’s Surge: The Hidden Engine of Growth
Silver production reached 158 MT in the quarter, a 10% QoQ increase, and its price has climbed over 20% since the start of 2024. This price spike translates directly into higher by‑product realizations, inflating the profit contribution from precious metals. Historically, when silver prices break the $25/oz barrier, miners with integrated zinc‑silver operations see a 15‑20% earnings uplift. Hindustan Zinc is now positioned to capture that upside repeatedly, given its low‑cost base and expanding refined capacity.
Operational Leverage: Volume Growth Meets Cost Discipline
The company recorded its highest ever mined metal output—276 kt, up 4% YoY and 7% QoQ—while refined metal production hit 270 kt, a 9% QoQ gain. More importantly, the cost per tonne fell to a five‑year low, indicating that the earnings boost is not merely a pricing artifact but genuine operating leverage. For investors, this dual engine of volume and cost advantage provides a buffer against future price corrections.
How Competitors Are Responding
Peers are scrambling. Tata Metals has announced a $1.2 bn capex plan to modernize its smelting complexes, while Adani Energy’s new zinc project targets a 2027 start‑up to chase the same price tailwinds. Both initiatives, however, will take years to materialize and will likely operate at higher cost structures. Hindustan Zinc’s already‑installed debottlenecking gives it a near‑term edge that could translate into market‑share gains as demand for zinc—driven by green‑energy infrastructure—continues to rise.
Technical Snapshot: What the Numbers Mean
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a proxy for operating cash flow; a 34% YoY rise signals stronger core profitability. The EBITDA margin of 55% indicates that more than half of every rupee of revenue converts into operating earnings—unusual in the capital‑intensive mining space. A basis point (bp) equals 0.01%; the 270 bp margin expansion underscores meaningful improvement.
Investor Playbook
Bull Case:
- Continued silver price strength fuels by‑product earnings, pushing profit contribution above 45%.
- Cost leadership entrenched at $940/tonne creates a wide moat against price volatility.
- Expansion of refined zinc capacity (additional 21 ktpa) captures growing demand from renewable‑energy projects.
- Strong balance sheet enables discretionary dividend payouts and share‑buyback opportunities.
Bear Case:
- Silver price correction could erode the 44% profit contribution, compressing margins.
- Geopolitical risks in key mining jurisdictions may disrupt production continuity.
- Higher global interest rates could increase financing costs for future capex.
- Regulatory tightening on environmental standards may raise compliance expenditures.
Bottom line: Hindustan Zinc’s record quarter is more than a one‑off headline; it reflects a sustainable blend of volume growth, cost efficiency, and precious‑metal tailwinds. Savvy investors should weigh the upside of a fortified margin profile against the downside of commodity‑price reversals before adjusting exposure.