HINDZINC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 4.2

📊 Financial Overview: Hindustan Zinc Ltd (HINDZINC) demonstrates outstanding profitability with a ROCE of 60.7% and ROE of 72.4%, among the highest in the industry. The company maintains a moderate debt-to-equity ratio of 0.82, supported by strong cash flows and consistent earnings. Its P/E ratio of 19.2 is attractive compared to the industry average of 30.8, though the PEG ratio of 7.48 suggests overvaluation relative to growth. PAT rose to ₹2,632 Cr from ₹2,204 Cr, marking a QoQ profit increase of 11.6%.

💼 Business Model & Competitive Edge: HINDZINC is India’s largest and the world’s second-largest integrated zinc-lead producer. It controls over 75% of India’s zinc market and operates some of the deepest mines globally. The company is also a major silver producer, with plans to ramp up production to 680 tonnes by FY26. Its strategic role in infrastructure, EV, and clean energy sectors, combined with cost leadership and Vedanta’s backing, gives it a durable competitive edge

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📉 Valuation & Entry Zone: Trading near its 50 DMA of ₹471, the stock is in a neutral technical zone. With RSI at 48.3 and MACD at 3.72, momentum is stable. A favorable entry zone lies between ₹450–₹465, offering a good long-term accumulation opportunity.

📈 Long-Term Holding Guidance: HINDZINC is a strong long-term hold due to its high return ratios, strategic importance in the metals sector, and consistent dividend payouts. Investors should monitor global zinc and silver prices, debt levels, and production ramp-up plans for sustained performance

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✅ Positive

• Exceptional ROCE and ROE indicate superior capital efficiency
• Attractive P/E ratio compared to industry average
• Strong dividend yield of 6.07%
• QoQ PAT growth of 11.6%
• Strategic silver production ramp-up planned for FY26

⚠️ Limitation

• High PEG ratio (7.48) signals overvaluation relative to growth
• Moderate debt-to-equity ratio (0.82) requires monitoring
• FII holdings slightly declined (-0.04%)

📉 Company Negative News

• Stock fell 3% recently due to cooling silver prices

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• Volume below 1-week average, indicating reduced trading interest

📈 Company Positive News

• CEO expects silver prices to remain strong till 2026

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• Hedged silver at $37/oz, providing downside protection
• Plans to produce 680 tonnes of saleable silver in FY26

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🏭 Industry

• Base metals benefit from infrastructure and clean energy demand
• India’s push for self-reliance in mining supports domestic producers
• Industry P/E of 30.8 reflects investor optimism in the metals space

🧾 Conclusion

HINDZINC is a fundamentally strong player with industry-leading return metrics and consistent dividend payouts. While the PEG ratio signals caution, its valuation remains attractive relative to peers. Investors may consider accumulating near ₹450–₹465 for long-term exposure to the base metals and silver growth story.

Sources

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