Silver surge, weak rupee lift Hindustan Zinc’s Q2 profit despite lower output

The ongoing silver rally and rupee weakness helped Hindustan Zinc Ltd report a 14% year-on-year rise in profit in the September quarter, offsetting a sharp decline in metal production.

The company, which produces zinc, lead and silver, reported consolidated profit ₹2,649 crore for the quarter. Quarterly revenue increased 4 percent ₹8,549 crore, the highest ever in the July-September period.

Silver production during the quarter fell by a fifth compared to last year, to 147 tonnes, limiting the company’s ability to benefit from the ongoing rise in silver prices. While lead production decreased by 29% to 45,000 tons, zinc production increased by 2% to 202,000 tons.

Additionally, the company reduced its silver sales forecast for this year to 680 tons from the previous 700-710 tons. Silver is recovered as a byproduct of zinc and lead production.

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“Looking ahead, taking into account low plant availability and lower silver input in the first half of the year, we have revised our FY2026 refined metal guidance to 1,075 kilotonnes plus/minus 10,000 tonnes/year and our silver guidance to 680 kilotonnes plus/minus 10 tonnes/year,” Arun Misra, chief executive officer (CEO) of Hindustan Zinc, said in a post-earnings review. Interaction with analysts.

Mishra said achieving the annual target of 680 tonnes would require a stronger second half, given that silver production in the first half was relatively slow. “To achieve this goal, we diverted resources from other mines to the SK Mine and offered incentives for contractors and workers to focus on extracting high silver ores,” he said, adding that this would help the company maximize production while prices remain strong.

Sindesar Khurd (SK) Mine, located in Rajasthan, is an underground operation and one of India’s largest silver producing sources.

Although zinc and lead prices remained relatively flat, silver prices rose an average of 34% year-on-year during the quarter to $39.4 per ounce. The precious metal is now above $50 per ounce. For every $1 increase in the price of silver, approximately ₹According to the investor presentation, the company’s earnings before interest, tax, depreciation and amortization (EBITDA) is 200 crore.

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This was reflected in the company’s margins. EBITDA, a measure of operating income, increased nearly 7% ₹4,209 crore despite low production figures. EBITDA margin also increased by 139 basis points to 49.2%.

Finance chief Sandeep Modi said silver contributed as much as 40% to the company’s profit during the quarter. “We are well positioned to capitalize on commodity tailwinds while strengthening our sustainable value creation through disciplined cost management, growth projects, value-added offerings and critical mineral development.”

Profitability support

The downward slide in the rupee against the US dollar has also helped the company’s profitability. Each ₹1 more decrease added against the dollar ₹200 crore to the company’s EBITDA. Rupee was at average, according to investor presentation ₹3.55 per dollar lower in the quarter compared to the previous year.

The company’s profitability was also supported by better cost management, with the cost of zinc production falling 7% annually to $995 per tonne.

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“I am pleased to share that we achieved our best-ever second quarter mine production with a 5-year low zinc production cost of $994 per tonne, reflecting continued operational excellence, technology intervention and the dedication of our employees,” said CEO Misra.

Hindustan Zinc shares closed 1.29% lower on BSE ₹The benchmark was at 500.05 compared to a 0.58% gain in the Sensex. Earnings were announced during market hours.

In August, the company’s board of directors approved an investment. ₹3,823 crore at the waste reprocessing plant at Rampura Agucha with an annual feed capacity of 10 million tonnes. This facility, which is expected to be completed in the last quarter of the financial year, will help the company extract valuable minerals found in trace amounts in mining waste after the extraction of zinc, lead and silver.

In early June, the company announced its investment plans. ₹12,000 crore by increasing metal processing capacity by 250,000 tonnes per annum. Currently the capacity is approximately 1.1 million tonnes per year. The company said it has “locked in” contractors for this expansion, which is expected to be completed in the second quarter of FY29.

Meanwhile, the commissioning of the company’s fertilizer plant in Chanderiya, which plans to produce 510,000 tons annually, has been postponed by 12-18 months. It is now expected to be operational in the first quarter of FY27. The plant will use sulfuric acid produced by the company as a byproduct, thus helping improve its margins.