Silver surge, weak rupee drive 67% jump in Hindustan Zinc Q4 profit

MUMBAI: Rise in silver prices, weakening of rupee and higher volumes led to a 67.6% year-on-year rise in Hindustan Zinc Ltd’s profit in the January-March quarter (QFY26); metal accounted for about 45% of earnings.

The company announced consolidated net profit ₹5,033 crore, while revenue increased by 49% ₹13,544 crore, thanks to higher metal prices and rising realisations.

“The combination of lowest cost of production, strong production and commodity headwinds translated into all-time high financial performance in both the quarter and the full year,” Hindustan Zinc CEO Arun Mishra said in a post-earnings statement.

Finance chief Sandeep Modi attributed the performance to higher production, strong by-product realizations and better mineral grades. He added that while commodity markets remain sensitive in the near term, fundamental fundamentals are starting to be constructive.

“Zinc demand remains stable, supported by galvanisation; lead demand in batteries is stable; silver is structurally ahead, with strong demand from solar and electronics triggering a persistent deficit,” Modi said.

Zinc production for Q4FY26 was up 5% year-on-year at 227,000 tonnes, while silver production remained largely flat at around 176 tonnes. Lead production decreased by 2% annually to 55,000 tons.

Silver production for the full year stood at around 627 tonnes, below the revised guidance of 680 tonnes, which was earlier reduced from 700-710 tonnes in the second quarter of FY26. Silver and lead production fell as the company prioritized zinc production.

“Earnings should not be viewed negatively as silver production missed guidance. As management has explained, this is largely a result of economic trade-offs within the business. Zinc prices have been strong, in the $3,200-$3,400 range, with the company optimizing its production mix based on what provides the best economic return. So production decisions are driven by profitability rather than volume targets,” said Suman Kumar, metals and mining analyst at brokerage firm Philip Capital.

“On costs, the company benefited from lower input expenses, especially softer domestic coal prices, which helped keep overall costs under control,” Kumar said.

Addressing the production strategy, Mishra said the company’s ore is predominantly rich in zinc, which adds more value to maximizing zinc production at current prices of $3,100 to $3,400 per tonne. However, if silver prices fall to $2,800-$3,000 per tonne and silver remains strong around $60 per ounce, the company could pivot to lead and silver, potentially increasing silver production to over 700 tonnes.

Throughout the year, mining metal production was 1.11 million tons and refined metal production was 1.05 million tons. For FY27, the company has guided for mined metal production of 1.15 million tonnes, refined metal production of 1.10 million tonnes and salable silver production of approximately 680 tonnes.

Company will pay brand and strategic fees for FY27 ₹1,300 crore to parent company Vedanta Ltd, under a deal valid until 2030, broadly in line with last year.

Looking ahead to FY27, the outlook remains positive despite short-term fluctuations in silver prices. Philip Capital analyst Kumar said the fall in silver prices may have some impact, but the overall metals cycle remains fundamentally strong and the company maintains its structural cost advantage.

“The key factors to watch will be the performance of the fertilizer plant, trends in silver prices and input cost pressures, especially as imported raw materials become more expensive due to geopolitical disruptions,” he said.

The company’s plan to commission a 510,000 tonnes per annum fertilizer plant at Chanderiya was delayed by 12-18 months and is now expected to become operational in the first quarter of FY27. The plant will help improve margins by using sulfuric acid produced as a by-product.

Hindustan Zinc shares closed 0.46% lower on the National Stock Exchange on Friday, compared to a 1.14% decline in the Nifty 50.