Hindustan Zinc shares jump 19% to record high

Shares of Hindustan Zinc rose 19% in intraday trade on Tuesday to hit a record high as the stock rallied on the expectations of a sharp rise in metal prices. Hindustan Zinc, a Vedanta Group mining company, produces zinc, lead and silver.

The stock opened at ₹633 today against its previous closing price of ₹618. It gained 19.4% to hit a 52-week high of ₹738.90 on the BSE, taking the company’s market cap to over ₹3.1 lakh crore.

The mining stock has gained 30% over the past five trading sessions and 131% so far this year. In comparison, the Nifty metal index has risen 24% in 2024 while the Nifty 50 gained just 3.7% during this period.

In April, Hindustan Zinc reported a 21% year-on-year drop in its net profit at ₹2,038 crore for the quarter ended March 2024. The company's FY24 net profit was at ₹7,759 crore, down 26% on account of lower EBITDA, partly offset by lower tax expense. The company's EBITDA income dipped 14% to ₹3,637 crore compared to ₹4,208 crore in the same quarter last year.

The world’s second largest integrated Zinc producer saw its revenue from operations growing marginally at 3% at ₹7,549 crore quarter-on-quarter while the revenue fell 11% year-on-year on significantly lower zinc and lead prices and lower lead volume. The company says its revenue for the full year FY24 stood at ₹28,932 crore, down 15% y-o-y on account of lower zinc prices and volumes, and strategic hedging impact in the base period.

Hindustan Zinc CEO Arun Misra says during the quarter, HZL became the third largest silver producer globally. "Our commitment to sustainability efforts remains robust. I am happy to share that our renewable energy (RE) power delivery agreement of 450 MW is advancing well and the first flow of RE power is now preponed and expected to begin in April’24," he says.

The company says its total reserves and resources as of March 31, 2024, stood at 456.3 million tonnes containing metal of 30.8 million tonnes. Total ore reserves stood at 175.1 million tonnes (net of production of 16.5 million tonnes in FY24) at the end of FY24 (173.5 million tonnes at the end of FY23), led by a focus on resource-to-reserve conversion during the year. Exclusive mineral resources totalled 281.2 million tonnes.

In its outlook, Hindustan Zinc says the company's mined metal and refined metal production in FY25 is expected to be higher than last year, given the ramp-up of all major projects commissioned in the last year and better capacity utilisation. The company's project capex for the fiscal year is expected to be in the range of $270-325 million.