Hindustan Zinc: An Analysis

B&K Securities has recommended buying Hindustan Zinc (HZL) stock, believing it’s a strong performer. They highlight the company’s low costs, growing production, and increasing profits from selling silver. This analysis will break down why B&K Securities sees HZL as a good investment.

Key Points

• B&K Securities recommends buying HZL stock.
• HZL has very low production costs compared to competitors.
• A major expansion project will double metal production capacity.
• Silver production is expected to significantly boost profits.
• Silver prices are forecast to remain high, driving revenue.
• The company’s strategy offers a 22.5% potential price increase.

Low Costs: Hindustan Zinc is producing zinc at a significantly lower cost than other companies worldwide. They spend around $994 per tonne, which is about 30% less than the average of $1,300 to $1,400 per tonne. This gives them a big advantage.

Expansion Project: The company is planning a major expansion, called ‘Hindustan Zinc 2.0’. This will increase their ability to make metal by 50%, boosting overall production. The project requires a substantial investment of ₹25,000 crore to ₹30,000 crore.

Silver’s Role: HZL produces a lot of silver as a byproduct. They plan to increase this production to 1,500 tonnes per year. Because silver prices are expected to keep going up, this silver production will add a huge amount to their profits. Currently, silver contributes 28% of their profits; this is set to rise to 42% by FY27.

Strategic Moves: HZL isn’t just focusing on zinc and silver. They are building a plant to make fertiliser (DPI/NPK), which is expected to add another ₹4 billion to their profits. This also improves how they use resources like sulphuric acid.

Improving Production: HZL is also making small changes to increase production quickly. They are upgrading their existing facilities, like the Debari Roaster, to boost output within the next few years.

“HZL’s strategic investments and operational efficiencies position it for sustained growth and attractive returns for investors.” – B&K Securities Recommendation.

(Disclaimer: View and outlook shared on the stock belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers discretion is advised.)