Why Is Hindustan Zinc’s Silver Contribution Crucial for Its FY26 Growth?
Hindustan Zinc Limited, India’s leading zinc, lead, and silver producer, has delivered a steady performance in Q2 FY26. The company achieved record-low production costs and reported an expanding share of silver in its overall profitability, strengthening its role in the global energy transition ecosystem.
Operationally, the company maintained its leadership in the metal sector with mined metal output reaching 258 Kt, a modest 1% YoY rise. Notably, its zinc cost of production dropped to just $994 per tonne — marking a five-year low and a 7% YoY improvement. This cost efficiency reinforces Hindustan Zinc’s operational resilience in a volatile commodity environment.
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The company’s Q2 FY26 report also highlighted key milestones such as the commissioning of a 160 Ktpa Roaster at Debari and completion of debottlenecking at Dariba Smelting Complex. In a strategic move, the board approved India’s first zinc tailing reprocessing plant of 10 Mtpa at Rampura Agucha — a project that could redefine resource utilization and ESG compliance in the metals sector.
Hindustan Zinc’s inclusion in Nifty 100 and Nifty Next 50 indices effective September 30, 2025, underscores investor confidence and enhances institutional visibility. The company achieved a total shareholder return of 7% in Q2, notably outperforming the Nifty 100 index which declined 3% during the same period.
Beyond operations, Hindustan Zinc is expanding its ESG footprint. It became the first Indian mining company to join the International Council on Mining and Metals (ICMM), reinforcing its global sustainability commitment. Management reiterated its focus on silver’s dual role — as both an industrial and financial asset — particularly vital in clean energy technologies like solar panels, electric vehicles, and electronics.
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For FY26, Hindustan Zinc guided mined metal production at 1,125 Kt (±10 Kt), refined metal at 1,075 Kt (±10 Kt), and saleable silver at 680 MT (±10 MT). With a cost of production around $1,000 per MT, the company expects margin stability even under input cost pressures. Growth capex between $350–400 million is earmarked for expansion, debottlenecking, and sustainability-linked projects — all supporting long-term scalability.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, observes that Hindustan Zinc’s low-cost structure, increased silver contribution, and ESG-centric capex signal a durable growth path. Its index inclusion, shareholder returns, and sustainability initiatives create a strong foundation for medium-term outperformance in the metals space.
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Related Queries
- How much silver contributes to Hindustan Zinc’s revenue mix?
- What is Hindustan Zinc’s cost of production outlook for FY26?
- Why is Hindustan Zinc focusing on ESG and ICMM membership?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
