Hindustan Zinc — Q3 FY25 earnings call

Call held 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

  • 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

Key financials

4 periods

Headline

  • Revenue
    ₹8,614 Cr
    YoY +18%
  • EBITDA
    ₹4,539 Cr
    YoY +28%
  • EBITDA Margin
    53%
  • PAT
    ₹2,678 Cr
    YoY +32%
  • Zinc COP (ex-royalty)
    1,041 $/ton
    YoY -5%

Q3

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

9M

  • Revenue
    ₹24,996 Cr
    YoY +17%
  • EBITDA
    ₹12,649 Cr
    YoY +26%
  • PAT
    ₹7,350 Cr
    YoY +28%
  • Mined Metal (record)
    784 KT

pre-CAPEX, 9M

  • Free Cash Flow
    ₹9,664 Cr

What they filed

Q1 FY27: revenue up 77.2%, net profit up 146.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue8,242 8,556 9,041 7,723 8,525 +3%10,922 +28%13,488 +49%13,687 +77%
EBITDA4,104 4,458 4,783 3,816 4,426 +8%6,005 +35%7,666 +60%7,994 +109%
Net profit2,298 2,647 2,976 2,204 2,632 +15%3,879 +47%4,997 +68%5,425 +146%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Production
    784 KT 9M Mined Metal (record)783 KT 9M Refined Metal (record)77% Domestic Zinc Market Share25 km (+14% QoQ) 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)

Guidance & targets

Production

  • FY25 Silver (revised) Production · FY25 · High confidence 700-710 tons

    Previously 750-775 tons → 700-710 tons

    we will achieve silver production between 700 to 710 tons during the current year

    — Arun Misra

Cost

  • FY25 Zinc COP (ex-royalty) Cost · FY25 · High confidence $1,050-1,100 (tracking lower end)
    we should be delivering towards the lower band of the guidance

    — Sandeep Modi

  • COP Roadmap via RE Power Cost · FY26-27 · Medium confidence $1,000 by FY26 exit; below $1,000 in FY27
    FY26 exit cost around $1000 and FY27 should be below $1000

    — Sandeep Modi

Growth

  • Expansion from 1.2 to 1.45 MT Growth · FY27-28 · Medium confidence 250 KT smelter + mining expansion; FY27-28 completion
    1.2 will go to 1.45 directly... anywhere between 1 and up to 2.5 years' time which will take us to FY27

    — Arun Misra

  • Full 2x Expansion CAPEX Growth · 3-5 years · Medium confidence $2-2.5 billion over 3-5 years
    if we launch this 2 million ton project, it will be between 3 to 5 years, $2 to $2.5 billion

    — Sandeep Modi

Sustainability

  • RE Power Target Sustainability · FY27 · High confidence 70% by FY27; saving $30/ton total from 15% base

    From 15% current today

    from 15% to 70% that is around 55% increase will have a $30 cost reduction in the next two years

    — Sandeep Modi

Risks & concerns

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

    medium

    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

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

    low

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

    Management acknowledged

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

    low

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

    Analyst acknowledged

  • Demerger discussions paused due to government OFS activities

    low

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

    Analyst acknowledged

Areas of evasion (1)

  • Tailings plant detailed economics deferred to next quarter

Q&A highlights

2 direct
2x Expansion Strategy: Phased Approach Direct
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

Cost Reduction Pathway via Renewable Energy Direct
every 2% increase in renewable energy will save one dollar... from 15% to 70%, $30 cost reduction in the next two years

RE scaling from 15% to 70% provides clear $30/ton structural cost reduction; signed PDAs with Serentica; FY26 exit at $1,000, below $1,000 in FY27

Asked by Anirudh

Tailings Reprocessing: Pioneering 10 MT Plant Partial
10 million ton recycling plant... tailings in Rampur Agucha, grade between 2% to 2.5%... no cost attached to the input side

World-first large-scale zinc tailings reprocessing; zero input cost with 2-2.5% grade; produces zinc and silver; technology being finalized with Australian testing

Asked by Ashish Kejriwal

2 min read 4 chapters

Detailed narrative

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.

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.

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.

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.

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