Hindustan Zinc shares rise 3% as Silver hits new high. What should investors do?

Shares of Hindustan Zinc rose as much as 3% to their new 52-week high of Rs 656.25 on the BSE on Monday, December 29, after silver prices extended their remarkable 2025 run to hit a new high of $82 per troy ounce.Silver prices (March futures contracts) also touched a new all-time high of Rs 2,54,174/kg on the Mutli Commodity Exchange (MCX), opening sharply higher by over Rs 14,000.

A range of factors, such as low supply, rising demand and an easing monetary policy cycle by central banks, have driven this year’s increase. However, after reaching record highs today, prices declined and settled back to around the $80 level.

The brokerage sees Hindustan Zinc as a clear beneficiary of higher silver and zinc prices, helped by first-decile zinc mining costs. While volume growth is expected to remain modest, earnings momentum is expected to remain strong, with earnings per share expected to grow 22% in FY26 and 29% in FY27, followed by a further 7% increase in FY28, according to Jefferies’ December 14 note.

This outlook is underpinned by robust cash generation and healthy return ratios, with FY26-28 EPS estimates 9-31% above broader Street forecasts. While the shares trade at 9.2x FY27E EV/EBITDA – above the long-term average of 7.3x – Jefferies believes the premium is justified given silver’s rising share of overall profitability.

Silver prices have staged a sharp rally in 2025, rising 172% to around $82 on the spot market, while Hindustan Zinc expects the global silver market to remain in deficit. The company assumes a silver price of $56–60 for the period 2HFY26–FY28, approximately 3–10% below prevailing spot levels. With almost 37% of silver volumes hedged at $37 in the second half of FY26, most of the upside from higher prices is likely to carry through into FY27, providing a meaningful boost to EBITDA.

Cost efficiency has also improved significantly. Zinc production costs (excluding royalties) fell from a peak of $1,257 in FY23 to $1,002 in 1HFY26, driven by better ore grades, increased use of domestic coal, softer international coal prices and a growing share of renewable energy, Jefferies noted. Looking ahead, costs are expected to remain broadly stable in FY26-28E as continued efficiency gains and higher renewable energy use are likely to offset the impact of deeper mining operations. and fluctuations in ore quality.

(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. They do not represent the views of the Economic Times)