Hindustan Zinc shares rise 4%, up nearly 9% in 3 sessions. What’s behind the recent surge?

Shares of Hindustan Zinc rallied as much as 4% to their day’s high of Rs 532 on Thursday, as silver hit a fresh high after the US Fed cut interest rates by 25 basis points for a third time in a row. The precious metal pushed past the $61-per-ounce mark it clinched on Wednesday, extending a strong run-up. With today’s rise, the stock is up 8.5% in 3 sessions and hover close to its 52-week high of Rs 547.

Lower rates typically favour non-interest-bearing assets such as precious metals. Silver has more than doubled so far this year following a severe supply crunch in October, easily outpacing gold’s roughly 60% increase over the same period. Market participants are also beginning to look beyond the immediate Fed call. CME FedWatch data shows that investors are pricing in a more than 77% probability of two further reductions

Hindustan Zinc, part of the Vedanta Group, is India’s only listed company with a pure-play silver profile. The metal contributes roughly 40–45% of its EBIT, making its stock highly sensitive to price moves.

Emkay noted that the Street had yet to fully account for Hindustan Zinc’s silver leverage, even as global producers such as Fresnillo and Grupo Mexico saw re-ratings through 2025. With consensus forecasts still lagging the metal’s rally, the brokerage argued that Hindustan Zinc’s valuation has room to catch up — a development that would directly support parent Vedanta Ltd., which derives around 40% of consolidated EBITDA from the miner.

Emkay highlighted that silver, being a by-product of zinc, delivers an 88% EBITDA pass-through since production costs are tied to zinc output. Hindustan Zinc reported EBITDA of Rs 17,400 crore in FY25 with margins of 53%. If current zinc and silver prices sustain, the firm’s EBITDA could rise to Rs 22,000 crore with margins improving to 57% by FY27, the brokerage estimated.

On the global stage, Hindustan Zinc ranks among the leading silver producers, with annual output of 22.5 million ounces — ahead of Grupo Mexico’s 12.1 million ounces and not far from top players such as Fresnillo at 52.5 million ounces and Newmont at 28 million ounces. The company also operates in the lowest quartile of the global zinc cost curve and has a mine life of about 25 years.

Hindustan Zinc shares are up 20% on a year-to-date basis.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)