Hindustan Zinc

Hindustan Zinc delivered a robust Q1 FY26, achieving its highest-ever mine metal production of 265,000 tons. The company also recorded its lowest Q1 cost of production since underground transition at $1,010 per ton, marking a 9% year-on-year reduction. This efficiency was driven by improved metal grades, higher domestic coal utilization, increased renewable energy usage, and softened input commodity prices. Despite a 4% YoY decline in revenue to ₹7,771 crores due to softer zinc and lead prices (down 7% and 10% YoY respectively), the company maintained an industry-leading EBITDA margin of approximately 50%.

The company is actively pursuing its growth plan to double capacity, with an initial phase involving a ₹12,000 crore CAPEX to add 250,000 tons per annum integrated metal capacity. Key projects are on track, with the new 160,000 tons per annum roaster at Debari expected to be commissioned by mid-Q2 FY26, having reached 99.9% construction completion. Additionally, all smelter debottlenecking activities are scheduled for completion in Q2, starting from August, which is expected to support the achievement of full-year production guidance.

Hindustan Zinc has secured Letters of Intent (LOIs) for three critical mineral blocks: Potash in Rajasthan, Rare Earth Element in Uttar Pradesh, and Tungsten in Andhra Pradesh, marking a strategic entry into India's critical mineral ecosystem. The company's 0.5-million-ton fertilizer plant, with a total CAPEX of ₹1,800 crores (₹1,000 crores already spent), is projected to generate ₹400-450 crores in EBITDA and ₹2,000-2,500 crores in revenue. Management anticipates a rapid ramp-up within three months of commissioning, with efforts to bring the phosphoric acid plant online earlier to generate revenue.

The company demonstrated strong commitment to sustainability, achieving 3.32x water positive status and launching comprehensive 'Sustainability Goals 2030.' Renewable energy now accounts for 19% of the total power consumption, up from 13% in the last fiscal year, significantly contributing to cost reduction. Management expects greenhouse gas emissions to decrease below 4.6-4.5 level from Q1's 4.86, driven by the increasing share of renewable power and higher production volumes in subsequent quarters.

The 250 KTPA integrated metal capacity expansion is projected to increase revenue by approximately ₹40,000 crores and EBITDA by ₹21,000 crores over the next three to four years. Hindustan Zinc anticipates generating ₹45,000-50,000 crores in free cash flow over the next five years, with an estimated CAPEX of ₹32,000-35,000 crores during the same period. The company paid an interim dividend of ₹10 per share, totaling ₹4,225 crores, and reported a net debt of approximately ₹4,000 crores, with ₹18,000 crores available for distribution after planned CAPEX.

Despite a significant 17% year-on-year surge in silver prices to over $37 per troy ounce, Q1 salable silver production stood at 149 metric tons. This was primarily attributed to lower overall metal production and a reduced silver grade of 88 ppm in the SK Mine, which was 5-10 points lower than the previous year. Management confirmed prioritizing concentrates with the best silver content in Q1 and expects improved silver volumes in Q3 and Q4, supported by the commissioning of the new roaster and ongoing debottlenecking activities, to meet the full-year guidance.