Hindustan Zinc — Q4 FY25 earnings call

Call held 25 Apr 2025

Management summary

Hindustan Zinc delivered a record-breaking FY25 with highest-ever production volumes and second-best financial performance. The 4-year lowest COP, 51% EBITDA margin (+400 bps YoY), and 58% ROCE showcase structural cost leadership. Management is aggressively progressing the 2x capacity expansion to 2 MT by FY31, with first phase (1.2→1.5 MT) announcement expected imminently. Silver at 700-710 ton guidance reflects zinc-lead mode strategy at current prices, with long-term path to 1,200-1,300 tons.

Highlights

  • Record mined metal production (310 KT in Q4, highest-ever Q4); record full-year mined and refined metal production

  • Second-highest ever revenue Rs. 34,083 crores (+18% YoY), EBITDA Rs. 17,465 crores (+28% YoY), PAT Rs. 10,353 crores (+33% YoY)

  • Best-ever Q4 PAT of Rs. 3,003 crores (+47% YoY); Q4 EBITDA Rs. 4,816 crores (+32% YoY) at 53% margin

  • Zinc COP of $994/ton in Q4 (16-quarter low); FY25 $1,052/ton (4-year low); FY26 guidance $1,025-1,050/ton

  • FY26 guidance: mined metal 1.125 MT +/-10 KT, refined metal 1.1 MT +/-10 KT, silver 700-710 tons

  • Free cash flow from operations Rs. 13,784 crores; dividends Rs. 12,053 crores; ROCE 58%

  • 2x expansion to 2 MT by FY31 with first phase announcement expected within 1 month; Rs. 32,000-35,000 crores total CAPEX

  • Mine reserves crossed 13 MT metals (first time since underground transition); mine life 25+ years

Key financials

3 periods

Headline

  • Free Cash Flow
    ₹13,784 Cr
  • ROCE
    58%

Q4

  • Revenue
    ₹9,087 Cr
    YoY +20%
  • EBITDA
    ₹4,816 Cr
    YoY +32%
  • PAT
    ₹3,003 Cr
    YoY +47%
  • Mined Metal
    310 KT
    QoQ +17%
  • Zinc COP (ex-royalty)
    994 $/ton
    YoY -6%

FY25

  • Revenue
    ₹34,083 Cr
    YoY +18%
  • EBITDA
    ₹17,465 Cr
    YoY +28%
  • EBITDA Margin
    51%
  • PAT
    ₹10,353 Cr
    YoY +33%
  • Zinc COP (ex-royalty)
    1,052 $/ton
  • Dividends Paid
    ₹12,053 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 (FY25)
    310 KT Q4 Mined Metal (record Q4)7.8% Q4 Grade7.5% FY25 Grade77% Domestic Zinc Market Share22% VAP Share15% RE Power (Q4)46% Domestic Coal (Q4)
  • CAPEX
    ₹4,300 Cr FY25 Total CAPEX₹1,500 Cr Growth CAPEX₹2,800 Cr Sustaining CAPEX

Guidance & targets

Production

  • FY26 Mined Metal Production · FY26 · High confidence 1,125 KT +/-10 KT
    mine metal production expected to be 1,125,000 tons per annum plus or minus 10,000 tons

    — Arun Misra

  • FY26 Refined Metal Production · FY26 · High confidence 1,100 KT +/-10 KT
    refined metal production of 1.1 million tons, plus and minus 10,000 tons

    — Arun Misra

  • FY26 Silver Production · FY26 · High confidence 700-710 tons
    refined silver production in the range of 700 tons to 710 tons

    — Arun Misra

Cost

  • FY26 Zinc COP (ex-royalty) Cost · FY26 · High confidence $1,025-1,050/ton

    From $1,052 FY25 today

    zinc production at a cost of $1,025 to $1,050 per ton

    — Arun Misra

Growth

  • 2x Expansion First Phase Growth · FY28 completion · High confidence 1.2→1.5 MT, announcement within 1 month
    1.5 million ton is the next best option, most economic option... another 24 months for completion

    — Arun Misra

  • 2x Expansion Total CAPEX Growth · By FY31 · Medium confidence Rs. 32,000-35,000 crores over 5 years
    estimated capital expenditure for doubling the capacity over the next five years should stand between Rs. 32,000-35,000 crores

    — Sandeep Modi

Sustainability

  • RE Power Share FY26 Sustainability · FY26 · High confidence 30-35% (vs 13% FY25)

    From 13% FY25 today

    renewable power usage, which is expected to grow to 30% to 35% versus 13% in FY '25

    — Sandeep Modi

Risks & concerns

  • Mine lease renewals for RA, RD, Zawar mines due 2030

    medium

    Key mines expire 2030 but management supremely confident of retention given $1km+ underground infrastructure; spending on expansion regardless

    Analyst downplayed

  • Fatality incident at Zawar

    medium

    Safety officer lost during telecom tower dismantling; corrective measures and protocol strengthening underway

    Management acknowledged

  • Massive CAPEX cycle of Rs. 32-35K crores while maintaining high dividends

    medium

    Management confident FCF of Rs. 50K crores over 5 years covers both CAPEX and dividends; will use partial debt funding to improve equity IRR

    Analyst downplayed

  • Global zinc market potentially in surplus

    low

    ILZSG projects surplus but management focused on India's deficit story driven by 300 MT steel target; 77% domestic market share insulates

    Analyst deflected

Areas of evasion (2)

  • Sulfuric acid pricing
  • Mine lease renewal specifics

Q&A highlights

2 direct
2x Expansion Timeline and Strategy Direct
1.5 million ton is the next best option, most economic option... in 3 to 4 months of time, we complete all the announcements related to 1 million tons

First phase (1.2→1.5 MT) announcement imminent with RA mine+mill+smelter; Rs. 32-35K crore total capex for full 2x; 24-month completion after order placement

Asked by Ashish Kejriwal

Mine Lease Renewal Confidence Partial
1 kilometer below ground, we have invested, developed the mine. Is that possible for us to let it go or anybody else to come and just take it over and operate? Not possible

RA, RD, and Zawar mines expire 2030; management fully confident of retention but no policy change confirmed; spending on expansion regardless

Asked by Sumangal Nevatia

Silver Strategy and Long-Term Path to 1,200-1,300 Tons Direct
in that 2 million ton expansion plan, we should be hitting 1,200-1,300 tons of silver... Zawar, SK mine will expand, Agucha Galena zone full of lead and silver

Current 700 ton guidance conservative due to zinc-lead mode; long-term path to nearly double silver production as all mines expand and Galena zones accessed

Asked by Aditya Welekar

2 min read 4 chapters

Detailed narrative

Record FY25: Production and Cost Excellence

HZL delivered record mined and refined metal production for FY25, with Q4 achieving 310 KT mined metal (highest Q4 since underground transition). Zinc COP fell to 4-year low of $1,052/ton ($994 in Q4), driven by domestic coal at 46%, RE power at 15%, and operational efficiencies. Revenue grew 18% to Rs. 34,083 crores while EBITDA surged 28% to Rs. 17,465 crores at 51% margin (+400 bps). PAT at Rs. 10,353 crores (+33%) was second-highest ever.

2x Growth: Transformative Expansion to 2 Million Tons

Management is aggressively progressing the 2x expansion from 1 MT to 2 MT by FY31. First phase (1.2→1.5 MT) announcement expected within 1 month, covering RA mine expansion, new concentrator, and smelter at Debari. Total CAPEX of Rs. 32,000-35,000 crores over 5 years, funded through mix of internal accruals (Rs. 50,000 crores pre-CAPEX FCF projected) and debt. Peak capacity by FY31 would generate Rs. 60-65K crores revenue and Rs. 34K crores EBITDA.

Silver: Conservative Near-Term, Massive Long-Term Upside

FY26 silver guidance of 700-710 tons reflects full-year zinc-lead mode (vs lead mode in FY24 which produced 744 tons). Management sees 1,200-1,300 tons in the 2x plan as SK mine expands, Zawar's Baroi mine contributes, and Agucha's Galena zone is accessed. Pantnagar refinery already has 800-ton capacity; will need expansion to 1,500 tons. Innovative hot acid leaching technology (alternative to fumers) being implemented at Dariba for additional 27 tons silver and 6 KT lead annually.

Shareholder Returns and Balance Sheet Strength

Distributed Rs. 12,053 crores in dividends during FY25. Generated Rs. 13,784 crores FCF from operations. ROCE at industry-leading 58%. Total shareholder return of 68% (13x Nifty 50). Market cap rose from 62nd to 39th in Nifty ranking. Contributed Rs. 18,730 crores to exchequer including Rs. 4,200 crores royalty to Rajasthan (35% of state's total royalty income). Recently included in F&O segment on NSE.

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