More gains for HZL depend on volume, LME price trajectory

Hindustan Zinc (HZL) registered net sales of 10,980 crore in Q3FY26 and this was up 28 per cent sequentially with higher volumes coinciding with higher London Metal Exchange (LME) and silver prices.

- DEVANGSHU DATTA

It reported consolidated operating profit of 6,050 crore, up 36 per cent quarter-on-quarter (Q-o-Q), with margins driven by lower cost of production.

The operating profit margin stood at 55.1 per cent in Q3FY26 (52 per cent in Q2FY26 and 52.2 per cent in Q3FY25).

The mined metal production for Q3 was 270 kilotonnes (kt) (247 kt in Q2), up 9 per cent Q-o-Q. Adjusted net profit came in at %3,890 crore, up 47 per cent Q-o-Q. The zinc cost of production (excluding royalty) dropped to $940/tonne from $994/tonne in Q2FY26 due to lower power costs.

The numbers beat consensus. HZL guided for cost of production of $950-1,000/tonne for zinc, while maintaining volume guidance for FY26 for refined and mined metal and silver.

The management plans to hedge 10-20 percent of annual production.

The growth capex guidance has been revised up to $300 million while maintenance capex guidance has been maintained at $400 million for FY26. HZL is building renewable capacity fast. Renewable energy (RE) contributes 20 per cent of current power requirements.