HZL Expansion Plan Not Enough

Mixed bag Continued buoyancy in silver prices should support Hindustan Zinc's FY26 earnings despite dull prospects for other metals.

- Ashish Agrawal

Hindustan Zinc Ltd (HZL)'s capacity expansion plan failed to cheer investors, with the stock sliding about 10% after the promoter group offloaded 1.6% of its shareholding. The company has announced plans to invest ₹12,000 crore in the first phase between FY26 and FY28, with total capex reaching ₹32,000-35,000 crore by FY31.

Despite a healthy balance sheet, with net debt-to-equity of 0.1x at FY25-end, and steady operating cash flows, the scale of expansion raises questions over future dividend payouts. But the management has indicated it may tap the balance sheet to maintain dividend payouts.