HINDZINC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 4.2

📊 Core Financials:

- Quarterly PAT at ₹2,632 Cr vs ₹2,204 Cr previously → strong growth momentum.

- Exceptional profitability with ROCE at 60.7% and ROE at 72.4%.

- Debt-to-equity ratio at 0.82 → moderate leverage but manageable.

- Cash flows remain strong, supported by consistent earnings and high dividend yield of 4.84%.

💹 Valuation Indicators:

- Current P/E: 23.8 vs Industry P/E: 37.6 → undervalued compared to peers.

- P/B ratio: ~18.3 (₹589 / ₹32.2) → expensive valuation.

- PEG ratio: 9.30 → stretched valuation relative to growth.

- Intrinsic value appears lower than CMP, suggesting premium pricing despite sector undervaluation.

🏢 Business Model & Competitive Advantage:

- Hindustan Zinc is India’s largest zinc producer with integrated mining and smelting operations.

- Competitive advantage lies in resource ownership, cost efficiencies, and strong demand for zinc in infrastructure and industrial sectors.

- Market cap of ₹2,48,829 Cr reflects leadership in the metals industry.

📈 Entry Zone & Long-Term Guidance:

- CMP ₹589 is above DMA 50 (₹499) and DMA 200 (₹470), showing strong bullish momentum.

- RSI at 81.0 indicates overbought zone, suggesting caution for fresh entry.

- Suggested entry zone: ₹500–₹540.

- Long-term holding recommended due to strong fundamentals, high dividend yield, and industry leadership, though valuations are stretched.

Positive

• Exceptional ROCE (60.7%) and ROE (72.4%).
• High dividend yield of 4.84%.
• Quarterly PAT growth of 11.6%.
• Undervalued compared to industry P/E (23.8 vs 37.6).

Limitation

• P/B ratio ~18.3 indicates expensive valuation.
• PEG ratio of 9.30 suggests stretched valuation relative to growth.
• RSI at 81.0 shows overbought levels, risk of short-term correction.

Company Negative News

• FII holdings reduced by -0.04%.
• Debt-to-equity ratio at 0.82 is higher than ideal for metals sector.

Company Positive News

• DII holdings increased by 0.11%.
• Quarterly PAT improved from ₹2,204 Cr to ₹2,632 Cr.

Industry

• Metals industry is cyclical, driven by global demand and commodity prices.
• Industry P/E at 37.6 indicates sector is richly valued compared to Hindustan Zinc’s lower P/E of 23.8.

Conclusion

⚖️ Hindustan Zinc is financially strong with outstanding return ratios, high dividend yield, and consistent profit growth. While valuations are stretched on P/B and PEG metrics, the stock trades at a discount to industry P/E. Entry is favorable around ₹500–₹540 for long-term investors, but caution is advised due to overbought technicals and cyclical risks.