Hindustan Zinc Shares Soar 5% on Jefferies Target Hike to Rs 750

Hindustan Zinc shares surged over 5% in Wednesday’s trading following a significant target price upgrade by Jefferies. The brokerage firm raised its target for the stock to Rs 750 from Rs 660, maintaining its ‘Buy’ rating.

This positive outlook stems from an improved dynamic in the global zinc market, a notable rebound in silver prices, and a substantial upgrade to the company’s earnings estimates.

Key Analyst Projections

• Jefferies revised its FY27-29E earnings per share (EPS) estimates upwards by 10-11%.
• These forecasts now stand 16-23% higher than consensus estimates.
• The updated target price implies a total shareholder return of approximately 31%, comprising 27% in potential price appreciation and an estimated 4% dividend yield.
• An additional 12% upgrade to FY28 EPS estimates is possible if current spot metal prices are sustained.

Global Zinc Market Shifts to Deficit

A primary driver for this bullish sentiment is the anticipated shift in the global zinc market balance, as reported by the International Lead and Zinc Study Group.

• The 2026 global zinc balance projection has adjusted from a surplus of 271 kilotonnes to a deficit of 19 kilotonnes.
• This change is attributed to declining mine output, operational disruptions, lower ore grades, and limited new supply outside China.
• Consequently, zinc prices have climbed 31% since March, reaching around $3,966 per tonne.

Silver’s Strong Rebound Bolsters Valuation

The recovery in silver prices also plays a crucial role, given its significant contribution to Hindustan Zinc’s earnings.

• Silver accounted for approximately 45% of the company’s FY26 EBIT.
• The metal has rebounded 23% to about $68 per ounce after experiencing a 37% decline between May and July.
• Jefferies’ commodities team remains optimistic about precious metals, citing factors like fiscal deficits, high debt levels, and currency debasement.

Robust Financial Health and Q1 Performance

Hindustan Zinc’s strong balance sheet further solidifies the investment case, with projected significant growth in its net cash position.

• The company’s net cash is projected to grow from Rs 5,200 crore in FY26 to Rs 22,700 crore by FY29.
• This contrasts with peers such as Hindalco Industries, which reported a 74% increase in net debt in FY26.
• The company also posted stronger-than-expected Q1 results, with consolidated net profit rising 8.7% sequentially to Rs 5,469 crore.
• Revenue for Q1 increased 1.5% to Rs 13,747 crore.

Investors should continue to monitor zinc and silver prices, the evolving global supply-demand balance for zinc, and Hindustan Zinc’s effectiveness in converting strong commodity prices into earnings and cash generation, as Jefferies anticipates a stronger earnings trajectory.