Will Hindustan Zinc's shares continue to shine with silver prices at a record high? The metal's over 100% gain in 2025 has already propelled the company's stock up 28% year-to-date, sparking questions about its future trajectory.
The recent surge in silver prices, now past $65 per troy ounce, has directly benefited Hindustan Zinc, given its low zinc mining costs and robust margin resilience. With a significant portion of its silver volumes hedged, the company is poised to capitalize on the ongoing rally.
Hindustan Zinc's Growth Outlook
Jefferies' Buy rating and projection of sharp earnings expansion, with 22% EPS growth in FY26 and 29% in FY27, underscore the company's potential. Strong cash generation and healthy return on equity support this optimistic outlook, with FY26–28 EPS estimates surpassing Street expectations.
The stock's valuation, though above its long-term average, is justified by the rising contribution of silver to overall profitability. With nearly 37% of its 2HFY26 silver volumes hedged at $37, the bulk of the upside from higher prices is likely to flow through to earnings in FY27, delivering a meaningful boost to EBITDA.
Technical Analysis and Trader Insights
From a technical standpoint, the stock has broken above its previous resistance zone, indicating aggressive buying interest. The bullish alignment of trading above key moving averages confirms a strong uptrend and trend reversal on the medium-term charts.
Historically, such breakouts have led to sustained rallies, with the stock potentially targeting Rs 620+ levels if it can clear the Rs 600 psychological and technical resistance. Trader psychology also plays a role, as the fear of missing out (FOMO) and the desire to ride the momentum can drive prices higher.
In the context of the Indian market, particularly the Nifty and Sensex, Hindustan Zinc's performance is a testament to the strength of the metals and mining sector. The Bank Nifty, often seen as a benchmark for Indian banking stocks, has also shown resilience in the face of global economic uncertainty.
What Should Traders / Investors Do Now?
- Intraday traders: Consider taking profits on extended rallies and looking for minor pullbacks to enter or add to positions.
- Short-term traders: Ride the momentum, but be cautious of potential profit-booking near key resistance levels.
- Long-term investors: Focus on the company's fundamentals and growth prospects, considering the potential for sustained earnings expansion and dividend yields.
Frequently Asked Questions
- Will Nifty fall after this news? The impact on the broader market is uncertain, but Hindustan Zinc's performance is a positive indicator for the metals and mining sector.
- Is this good or bad for bank stocks? The relationship between metals and banking stocks is complex, but a strong economy and resilient banking sector can support the growth of companies like Hindustan Zinc.
- What should retail investors watch next? Keep an eye on silver prices, global economic trends, and the performance of other metals and mining stocks to gauge the broader market sentiment.
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Disclaimer: The views and opinions expressed in this article are for educational purposes only and should not be considered as investment advice. Investors should consult with financial experts before making any investment decisions.