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    Hindustan Zinc

    HINDZINCGood
    Metals & Mining·28 Jan 2025
    Management Summary

    Hindustan Zinc delivered its best-ever Q3 performance with record revenue and EBITDA driven by 18% higher zinc and 27% higher silver prices alongside operational excellence. The COP journey continues impressively at $1,041/ton, tracking toward the $1,000 target via RE power scaling (15% to 70% over 2 years, saving $30/ton). The company is actively progressing the 2x expansion from 1.2 to 2 MT with 250 KT smelter and mining contractor finalization imminent, plus a groundbreaking 10 MT tailings reprocessing plant in design stage.

    Highlights

    8

    • Highest-ever Q3 revenue of Rs. 8,614 crores (+18% YoY) and highest-ever Q3 EBITDA of Rs. 4,539 crores (+28% YoY) at 53% margin

    • PAT of Rs. 2,678 crores (+32% YoY); 9M PAT Rs. 7,350 crores (+28% YoY)

    • Record 9M mined metal (784 KT) and refined metal (783 KT) production; Q3 mined metal 265 KT (+3% QoQ)

    • Zinc COP at $1,041/ton (-5% YoY), 15-quarter lowest; 9M COP $1,073/ton (4-year best); tracking lower end of $1,050-1,100 guidance

    • Silver guidance revised to 700-710 tons (from 750-775) due to Fumer shutdown and SK Mine geotechnical issues

    • Expansion plans: 250 KT smelter order placement imminent; 3 global mining contractors being finalized; 10 MT tailings reprocessing plant under design

    • Total shareholder return of 62% YTD (10x Nifty 50, 13x Nifty Metal); market cap up Rs. 64,000 crores in FY25

    • Zinc alloy subsidiary achieving Rs. 150 crores annualized EBITDA run rate; payback under 2 years

    What Changed2

    vs Q4 FY25

    Tone shiftStrong → GoodGuidance items7 → 6 (-1)
    Key financials

    Metrics

    12

    Periods

    4

    Headline

    5
    • Revenue
      ₹8,614 Cr
      YoY+18%
    • EBITDA
      ₹4,539 Cr
      YoY+28.0%
    • EBITDA Margin
      53%
    • PAT
      ₹2,678 Cr
      YoY+32%
    • Zinc COP (ex-royalty)
      1,041 $/ton
      YoY-5%

    Q3

    2
    • Mined Metal
      265 KT
      QoQ+3%
    • Refined Metal
      259 KT

    9M

    4
    • Revenue
      ₹24,996 Cr
      YoY+17%
    • EBITDA
      ₹12,649 Cr
      YoY+26%
    • PAT
      ₹7,350 Cr
      YoY+28.0%
    • Mined Metal (record)
      784 KT

    pre-CAPEX, 9M

    1
    • Free Cash Flow
      ₹9,664 Cr

    Segment breakdown

    Production
    784 KT 9M Mined Metal (record)783 KT 9M Refined Metal (record)77% Domestic Zinc Market Share25% Mine Development (Q3)15% RE Power Share
    Zinc Alloy Subsidiary
    ₹43 Cr Q3 EBITDA₹31 Cr Q3 PAT₹150 Cr Annualized EBITDA Run Rate₹200 Cr Peak EBITDA (at 28 KT capacity)
    List

    Guidance & targets

    6
    CategoryTargetPriority
    Production
    FY25 Silver (revised)
    700-710 tons
    		High
    Cost
    FY25 Zinc COP (ex-royalty)
    $1,050-1,100 (tracking lower end)
    		High
    Cost
    COP Roadmap via RE Power
    $1,000 by FY26 exit; below $1,000 in FY27
    		Medium
    Growth
    Expansion from 1.2 to 1.45 MT
    250 KT smelter + mining expansion; FY27-28 completion
    		Medium
    Growth
    Full 2x Expansion CAPEX
    $2-2.5 billion over 3-5 years
    		Medium
    Sustainability
    RE Power Target
    70% by FY27; saving $30/ton total from 15% base
    		High

    Risks & concerns

    5
    RiskSeverity

    Fumer operating at only 30% design capacity due to Chinese visa issues

    Produced only 5 tons silver in 6-7 months vs 32 ton annual design capacity; shutdown completed, targeting 60-70% in Q4; pursuing Chinese expert visas — Management acknowledged

    medium

    Silver guidance downgraded from 750-775 to 700-710 tons

    Due to Fumer shutdown and SK Mine geotechnical issues; management emphasizes silver is byproduct and metal/cost guidance is priority — Management acknowledged

    low

    Supreme Court mining cess ruling - Rs. 83 crore provision made

    Conservative provision of Rs. 83 crores in Q2; no demand received; may be reversed in subsequent quarters — Analyst acknowledged

    low

    Demerger discussions paused due to government OFS activities

    Government was busy with 1.5% OFS; focus shifted to critical mineral block bidding (won 3 blocks); demerger to be revisited — Analyst acknowledged

    low

    Areas of Evasion(1)

    • Tailings plant detailed economics deferred to next quarter

    Q&A highlights

    3

    “250 KTPA, if I commission, 1.2 will go to 1.45 directly... then maybe we will look at another 500 KTPA plant to take the capacity to 2 million tons”

    Clear phased roadmap: 1.2→1.45 MT via 250 KT smelter ($500M) + mining ($700-800M) by FY27-28; then 1.45→2.0 MT via 500 KT plant. Total $2-2.5 billion

    asked by Ashish Kejriwal

    2 min read4 chapters

    Detailed Narrative

    01

    Record Q3 Performance with 53% EBITDA Margin

    HZL delivered its best-ever Q3 with revenue of Rs. 8,614 crores (+18% YoY), EBITDA of Rs. 4,539 crores (+28% YoY), and PAT of Rs. 2,678 crores (+32% YoY). The 10-quarter best EBITDA margin of 53% was up 400 bps YoY. 9-month performance was record-setting with 784 KT mined metal and 783 KT refined metal. Zinc COP at $1,041/ton was 15-quarter lowest, driven by improved grades, domestic coal, and RE power.

    02

    Cost Reduction: RE Power as the $30/ton Game-Changer

    The cost reduction roadmap centers on scaling RE power from 15% to 70% over two years, providing $30/ton savings ($1/ton per 2% RE increase). Three power delivery agreements signed with Serentica. FY26 exit COP target is $1,000/ton, with FY27 expected below $1,000. Additionally, domestic coal at 44% (FY25) and volume growth provide further fixed cost absorption. The DAP fertilizer plant (commissioning Q4 FY26) will add Rs. 400-450 crores annual EBITDA.

    03

    2x Expansion: 250 KT Smelter and Mining Ramp-Up

    Management is finalizing 250 KT smelter order at Debari ($500M, $2,500/ton vs global $3,500/ton) and engaging 2 Australian + 1 Peruvian mining contractors for mine deepening (starting April). This first phase takes capacity from 1.2 to 1.45 MT by FY27-28. Total 2x expansion to 2 MT estimated at $2-2.5 billion over 3-5 years. Additionally, a pioneering 10 MT zinc tailings reprocessing plant at Rampura Agucha is under design with samples being tested in Australia.

    04

    Silver Optionality and Fumer Recovery

    Silver guidance revised down to 700-710 tons from 750-775 due to Fumer shutdown (design issues, Chinese visa problems) and SK Mine geotechnical issues. Fumer produced only 5 tons in 6-7 months at 30% capacity; targeting 60-70% in Q4 post shutdown completion. Silver prices surged 27% YoY to $34.51/oz highs. Management continues zinc-lead mode given favorable zinc prices. Long-term silver path tied to 2x expansion doubling lead processing capacity.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.