The target implies a potential upside of 33% from Thursday’s closing price.
HSBC said Hindustan Zinc’s recent underperformance is surprising, given the strength in global zinc prices and the earnings tailwinds they provide. According to the brokerage, weakness in silver prices and concerns over a potential government stake sale may have weighed on investor sentiment.
The brokerage highlighted that LME zinc prices have risen 18.5% year-to-date, outperforming other base metals such as copper, which has gained 12.6%, and aluminium, which is up 7.5%.
HSBC also said that silver prices appear to have bottomed out and have rebounded 11.9% over the past month, providing an additional earnings tailwind for the company.
The brokerage added that a weaker rupee, down 6.1% so far this year, along with strong sulphuric acid prices, points to a highly favourable operating environment for Hindustan Zinc.
At current commodity prices, HSBC estimates Hindustan Zinc could generate FY28 EBITDA of ₹34,100 crore and earnings per share (EPS) of ₹54, significantly higher than consensus estimates of ₹28,000 crore EBITDA and ₹43 EPS.At spot LME prices, the stock is trading at around 6.5 times FY28 estimated EV/EBITDA, which HSBC believes remains attractive given the earnings outlook.
The brokerage also highlighted Hindustan Zinc’s strong shareholder returns. The company has historically maintained a high dividend payout ratio, averaging 73% over the past three years.
