HINDZINC - Hindustan Zinc Ltd. Share Price

In the recent earnings conference call for Hindustan Zinc Limited held on July 18, 2025, management provided an optimistic outlook for the company's performance. They reported that the first quarter of FY '26 showcased the highest-ever mine metal production at 265,000 tons and the lowest cost of production for the first quarter since the underground transition, at $1,010 per ton. Notably, profit after tax for the quarter stood at Rs.2,234 crores despite lower output commodity prices.

Management highlighted several forward-looking points:

1. Capacity Expansion: The board approved a growth plan to double the capacity, initially adding 250,000 tons per annum of integrated metal capacity with a capital expenditure of approximately Rs.12,000 crores. This expansion will increase the refined metal capacity to 1.38 million tons per annum.

2. Sustainability Goals: The company announced ambitious "Sustainability Goals 2030," focusing on climate action, water stewardship, and biodiversity conservation to set industry benchmarks.

3. Market Recovery: Zinc and lead prices are anticipated to remain resilient near current levels, with silver prices projected to stay buoyant, currently at over $37 per troy ounce.

4. Financial Guidance: The revenue and EBITDA are expected to increase by approximately Rs.40,000 crores and Rs.21,000 crores respectively over the next three to four years due to expanded capacity and operational efficiencies.

5. Free Cash Flow Generation: The company expects pre-growth capex free cash flow generation of Rs.45,000 to Rs.50,000 crores, positioning it well for growth while maintaining dividends.

6. Silver Guidance: Management reiterated a production guidance of 700 to 710 tons for FY '26, despite a lower output in the first quarter, with expectations for improved production in subsequent quarters due to completed debottlenecking activities and new roaster commissioning.

Overall, Hindustan Zinc appears committed to sustainable growth, operational excellence, and responding to increasing domestic and global zinc demand.

Earnings Call Q&A Summary

Question: What would be the current renewable power mix in the total energy mix and what would be our coal mix for the same?
Answer: Currently, 19% of our overall power consumption comes from renewable energy, up from 13% last year. The remaining 80% is sourced from coal, of which 55% is domestic coal and 45% is imported. This marks our highest level of domestic coal utilization.

Question: Can you explain the lower silver volumes in Q1 and how the company plans to achieve the silver guidance of 700 to 710 tons?
Answer: The lower silver volumes were directly tied to reduced metal production and lower silver grades in the SK Mine. As we complete our debottlenecking projects and commission the new roaster mid-Q2, we anticipate a rebound in silver production to meet our guidance.

Question: What is the status of the Debari roaster and fertilizer plant's commissioning?
Answer: The Debari roaster is nearing completion, with 99.9% of construction done and commissioning set for Q2. The fertilizer plant is on track; we aim to expedite parts of the project to generate earlier revenue.

Question: Can you detail the mine metal production's effect on refined metal production, particularly regarding shutdowns?
Answer: We had planned shutdowns earlier than expected due to capacity constraints, which impacted refined metal production. However, we expect to overcome this in Q2 and aim for robust production through year-end.

Question: How are you planning to approach the increasing brand fee from 2% to 3%?
Answer: The brand fee structure has been reviewed and aligns with the long-term transformation of the company, reflecting the services provided and the growth achieved post-privatization. It will stay at 3% through the contract period, which lasts until FY '28.

Question: Are you maintaining guidance for FY '26 silver production?
Answer: Yes, we are confident in maintaining our silver production guidance for FY '26 despite Q1 setbacks due to operational constraints.

Question: What are the specifics regarding future expansion plans and equipment orders?
Answer: Orders for the first phase of our 250,000 tons per annum capacity expansion are already in process. The mining equipment will be ordered within the next two weeks, and the second phase is scheduled for order placement by late September.