The shares of Hindustan Zinc, a Vedanta Group company, have risen by over 2% on December 15, marking the fifth consecutive day of gains. This surge is largely driven by the increasing silver prices in the market. Jefferies, a renowned international brokerage firm, has initiated coverage on the stock with a 'Buy' call and a target price of Rs 660 per share.
The stock has reached a fresh 52-week high of Rs 571.80 apiece, before slightly paring some gains. Over the past five sessions, the stock has surged by around 17%. This significant growth is expected to continue, with Jefferies predicting an upside potential of over 17.5% from the previous closing price of Rs 561.65 per share.
Hindustan Zinc is a major beneficiary of the increasing silver and zinc prices. The company has a low cost of production, ranking in the first decile of the global zinc mining cost curve. As a result, Jefferies expects the company's earnings per share (EPS) to rise by 22% and 29% in FY26 and FY27, respectively, and by 7% in FY28.
The recent silver price surge, which has doubled to $62 in 2025, is expected to continue, with the global silver market anticipated to remain in deficit. Hindustan Zinc has hedged 37% of its silver volumes at $37, which will provide a significant boost to its EBITDA in FY27.
Jefferies expects Hindustan Zinc to experience robust cash flows and a high return on equity (RoE). The company's valuation is justified by the increasing share of silver in EBIT, with the stock trading at 9.2 times the FY27 enterprise value to EBITDA. This is above the long-term average of 7.3 times.
However, there are potential risks to this bullish call, including lower silver or zinc prices, mine grades, and mine renewals after 2030. Adverse related party events could also impact the company's performance.
As the largest producer of silver in India, Hindustan Zinc is well-positioned to benefit from the rising bullion prices. With a minimum purity of 99.9%, the company's refined silver is in high demand. The recent surge in silver futures on the Multi Commodity Exchange of India (MCX) has further boosted the stock's growth.
After hitting a 52-week low of Rs 378.15 per share in March, the stock has rebounded by over 51% in nine months to reach its new record high. However, it still remains over 60% lower than its all-time high of Rs 1,443 per share, achieved in January 2011.
Key points to note:
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