Hindustan Zinc has experienced a strong rally, marking its fifth consecutive session of gains and achieving a new 52-week high. The stock reached ₹571.6, demonstrating significant momentum in its stock performance. This surge has caught the attention of analysts, with Jefferies initiating coverage on the stock with a "Buy" rating and projecting a potential upside of 18%.

Jefferies' Bullish Outlook

Jefferies has set a price target of ₹660 per share for Hindustan Zinc, citing rising silver and zinc prices as key drivers for growth in the coming quarters. The brokerage firm highlights Hindustan Zinc's position as a primary beneficiary of these price increases, supported by its first-decile zinc mining costs. While volume growth is expected to be modest, Jefferies anticipates substantial earnings expansion, with earnings per share (EPS) growth of 22% in FY26 and 29% in FY27, followed by a further 7% increase in FY28. These EPS estimates are reportedly 9-31% higher than street expectations. Jefferies also points to the company's strong cash generation and healthy return on equity as supporting factors for its positive outlook.

Market Performance and Analysis

Hindustan Zinc's recent performance has outpaced the broader market, with a one-year return of 11.66% compared to the Sensex's 3.55% return over the same period. This relative strength underscores the company's ability to maintain positive momentum despite fluctuating market conditions. The stock's 52-week low was ₹378.65, illustrating a significant range of price movement and growth over the past year.

The non-ferrous metals sector, to which Hindustan Zinc belongs, has seen varied performance influenced by global commodity prices and domestic demand. Despite a weaker opening for the Sensex on the day Hindustan Zinc reached its new high, the company's performance signals resilience within its sector.

Factors Driving Growth

Several factors contribute to the positive outlook for Hindustan Zinc. Record silver prices, which have surged more than 120% in 2025, are a significant driver. Hindustan Zinc stands out as the only listed pure-play silver company in India, holding a near-monopoly on primary silver production in the country. Silver accounts for nearly 40% of the company's overall earnings before interest and taxes (EBIT). The company's cost efficiency has also improved, with reported zinc production costs (excluding royalties) declining from a peak of $1,257 in FY23 to $1,002 in the first half of FY26. This reduction is attributed to better ore grades, increased use of domestic coal, softer global coal prices, and a rising contribution from renewable energy.

Future Expectations and Analyst Sentiment

Analysts expect Hindustan Zinc's earnings per share to rise sharply, with Jefferies projecting growth of 22% in FY26 and 29% in FY27, followed by a 7% increase in FY28. These estimates are 9% to 31% higher than consensus forecasts. Jefferies anticipates return on equity to remain between 69% and 85% during this period, supported by high margins and stable operating performance.

However, analyst sentiment on the stock remains divided. Out of 18 analysts covering Hindustan Zinc, nine rate it a "Buy", three recommend "Hold", and six suggest "Sell". Despite a recent surge, the stock is still down about 30% from its record high of ₹807, reached in May 2024.

Company Strategy and Expansion

Hindustan Zinc is focused on expanding its silver production capacity to 830 tonnes per annum by the second quarter of FY29, while also increasing its refined metal capacity by 34% to 1.5 million tonnes per annum (MTPA). The company is also collaborating with over 40 technology startups to enhance innovation and shareholder value. While the company achieved record first-quarter mine metal production, it has also faced challenges such as a 4% year-on-year decline in revenue due to lower zinc and lead prices and a decline in silver production volumes. Hindustan Zinc is also focused on sustainability initiatives and reported being 3.32 times water positive.