Hindustan Zinc Soars 3% as Silver Prices Hit Record Highs

Silver prices have reached fresh record highs, and this is having a significant impact on the shares of Hindustan Zinc, the largest producer of silver in India. The company's shares jumped over 3% on December 22, reaching a new 52-week high of Rs 606.70 apiece.

Silver Prices Surge to Record Highs

Silver futures with March expiry jumped more than 3% to hit a fresh lifetime high of Rs 2,14,275 per kilogram. This marks the first time these contracts have crossed the key Rs 2.10 lakh-mark. Globally, spot silver surged to a record high of more than $69 an ounce, marking the first time it has crossed the milestone level.

Driving Factors Behind Silver Price Surge

The surge in silver prices is driven by a physical metal shortage, booming solar industry demand, strong Indian imports, and sustained inflows into silver ETFs. Investment demand remains robust as silver-backed ETFs continue to attract buying interest, with global holdings on pace for a sixth consecutive week of inflows.

Impact on Hindustan Zinc Shares

The recent surge in Hindustan Zinc shares was mostly driven by the sharp rise in silver prices. The company is increasingly emerging as a key beneficiary of the ongoing upcycle in precious and base metals, led by an exceptional rally in silver. Higher silver realization is strategically important for Hindustan Zinc, as silver has become a meaningful contributor to profitability alongside zinc and lead.

Technical Perspective and Analyst Views

From a technical perspective, the stock has been forming a long-term rounding bottom pattern, indicating gradual accumulation and improving risk appetite. Analysts at Jefferies have initiated coverage on the shares of Hindustan Zinc with a 'Buy' call and a target price of Rs 660 per share, implying an upside potential of more than 12% over the stock’s previous closing price.

Key Risks and Future Outlook

The key risks to the bullish call are lower silver or zinc prices and mine grades, mine renewals after 2030, as well as adverse related party events. However, with the company's strong fundamentals and technical momentum, Hindustan Zinc appears well positioned for a meaningful re-rating, driven by both fundamentals and technical momentum.

Remember, this is perspective, not prediction. Do your own research before making any investment decisions.