Metrics cut 1
- Fertilizer plant (DAP) completion deferred to Q1 FY28 pending environmental clearance and regulatory approvals
Event Participants
Executives
4 Amit Gupta, Amarendu Prakash, Arun Misra, Raksha Jain
Analysts
8 Anirudh Nagpal, Manav Gogia, Pallav Agarwal, Pinakin, Pratim Roy, Suman Kumar, Sumangal Nevatia, Tejas Pradhan
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Mine metal production | 268,000 tons | Highest-ever Q1 output, fifth consecutive year; driven by better mine grades and the 160 KTPA roaster |
| Refined metal production | 260,000 tons | +4% YoY; supported by debottlenecking at Chanderiya and Dariba despite planned lead smelter maintenance |
| Silver production | 149 tons | In line with lead production; ~9 tons silver equivalent additionally realized via 10 KT lead concentrate sale |
| Zinc cost of production (excl. royalty) | USD851/ton | -16% YoY; lowest since underground transition; better grades, higher output, renewable power and by-product realization partly offset higher input energy prices |
| Revenue from operations | ₹13,747 crores | +77% YoY; highest-ever quarterly; higher production, supportive commodity prices, better by-product realization, lead concentrate sales and stronger dollar |
| EBITDA | ₹8,074 crores | +109% YoY; record, first time above ₹8,000 crores; industry-leading EBITDA margin of 59% |
| Net profit | ₹5,469 crores | +145% YoY; record quarterly |
| Free cash flow (pre growth capex) | ₹5,253 crores | Strong cash generation reflecting cost leadership and disciplined financial management |
| Net cash position | ₹5,572 crores | Provides financial flexibility for growth projects and shareholder returns |
| Interim dividend | ₹11/share | First interim dividend for FY27; policy unchanged (minimum 30% of profit + 5% of reserves) |
Geographic & Segment Commentary
Zinc: Refined metal production of 260,000 tons (+4% YoY) driven by better mine grades, the 160 KTPA roaster covering calcine requirements during maintenance, and debottlenecking at Chanderiya/Dariba. Zinc averaged USD3,466/ton (high of USD3,625/ton) with demand supported by infrastructure, galvanization and constrained mine supply.
Lead: Production in line with expectations; lead averaged USD1,954/ton during the quarter. The company monetized 10,000 tons of old, inferior-grade lead concentrate inventory (from RD mine mill stabilization period) at favorable LME prices — realizing ~9 tons silver equivalent and 6,000 tons lead metal content — generating ₹315 crores of revenue.
Silver: Q1 production of 149 tons; silver averaged USD73/troy oz, moderating from the prior quarter but supported by robust industrial demand from solar, electronics and electrification. Silver contributed ~46% of overall profitability, reinforcing its strategic importance.
Rare Earth: Secured mining lease for a rare earth elements and Yttrium block in Gundlupet, Karnataka (G2 level) — a key step in the diversification into a multimetal enterprise and supporting India's critical mineral mission. Exploration is expected to take 2-3 years; production estimated around 2031-32.
Company-Specific & Strategic Commentary
Leadership Transition: Mr. Amarendu Prakash (former Chairman & MD of SAIL, 2023-2026, with 30+ years of industry experience) appointed CEO and Whole-Time Director effective August 1, 2026, succeeding Mr. Arun Misra, who steps down after leading Hindustan Zinc's transformation.
Growth Projects: Mine development started for the 250 KTPA Debari integrated zinc smelter to match mining capacity. Tailings reprocessing plant construction commenced (24-month build, expected ~30-35 KT zinc output, 6-8 month ramp-up). Hot acid leaching plant at Dariba and phosphoric acid plant at Chanderiya on track for Q2 FY27 completion. ~650 KT additional smelting capacity in conceptualization — board approval expected Q3 FY27, estimated capex ₹24,000-25,000 crores (including mines), 36-month construction post approval.
Sustainability & ESG: Renewable energy consumption reached 22%; Rampura Agucha Mine became the first Indian mine to receive Zinc Mark certification; deployed India's first 250 MT electric crane; first-time inclusion in the Dow Jones Best-in-Class Emerging Markets Index; signed green hydrogen MOUs with Advantek Associates LLP and Aero Eagle Automobile Pvt Ltd; added 1,869 Nand Ghars across Rajasthan (cumulative 11,000+).
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Refined metal production | ~1.1 million tons (FY27) | 260 KT achieved in Q1; management confident citing typical Q2-Q4 ramp-up with Q4 historically reaching 280-290 KT |
| Silver production | 680 tons (FY27) | Q1 at 149 tons (~158 tons including WIP and concentrate sale value); higher silver-grade ore planned from Q2-Q4 with Q4 maximization |
| Zinc COP excl. royalty | USD975-1,000/ton (FY27) | Q1 at USD851/ton "broadly in line" with guidance given higher by-product realization offsetting |
| Growth capex | USD500-600 million (FY27) | ₹800 crores spent in Q1 |
| New smelter capacity (~650 KT) | Board approval Q3 FY27; 36-month construction post approval | Estimated capex ₹24,000-25,000 crores including mines; exact cost to be finalized post tendering (~1 month) |
| Fertilizer plant | Phosphoric acid plant by Q2 FY27; fertilizer plant by Q1 FY28 | Full fertilizer plant pending environmental clearance and regulatory approvals; ~₹500 crores spent till Q1 |
| REE/Yttrium production | ~2031-32 | 2-3 years of exploration (G2 level) to establish reserve resource base, then mine planning and metallization |
| Net cash position | Remain net cash through FY27 | Based on predicted volumes and prevailing market prices |
Risks & Constraints
| Risk | Context |
|---|---|
| Power & fuel cost inflation | Q1 power and fuel costs rose sequentially due to lower domestic linkage coal materialization (36% vs 54% last year, 64% in Q4) and costlier imported coal, partly offset by higher renewable consumption. Management expects improvement in Q2 from higher production volumes but flagged input commodity price risk. |
| Commodity price volatility & hedging losses | Zinc, lead and silver prices remain sensitive to geopolitical developments and evolving trade policies. Q1 hedge losses of ~₹200 crores; open hedges of 48 KT zinc at USD3,162/ton and 34 tons silver at USD63/oz. No new hedging undertaken given market volatility. |
| SEBI observation on related party transactions | SEBI flagged RPT observations but imposed no financial penalty or restrictions. Issue arose where omnibus approval value limits were crossed on LME price increases despite quantity compliance. Corrective SOP implemented: alarm at 80% of approved value triggers Audit Committee/Board re-approval. |
| Project execution & regulatory approvals | Fertilizer plant delayed to Q1 FY28 pending environmental clearance; tailings reprocessing has no comparable global precedent at this scale (only one mine in Australia), implying ramp-up uncertainty; new smelter subject to board approval in Q3 FY27. |
| Government stake sale overhang | Media reports on Government of India selling its stake in Hindustan Zinc; management deferred to the government with no update shared — potential overhang on the stock. |
Q&A Highlights
Power & Fuel Cost Inflation
- Question: Power and fuel costs rose sequentially despite lower metal production and higher renewable share — what drove this? (Pallav Agarwal)
- Answer: Higher costs were due to lower materialization of linkage coal (mine conditions at source) and higher-cost imported coal, partly offset by greater renewable consumption. Domestic coal linkage proportion fell to 36% vs 54% last year and 64% in Q4. (Amit Gupta, Arun Misra)
Lead Concentrate Sale Rationale
- Question: The company historically doesn't sell concentrate — is this temporary? (Pallav Agarwal)
- Answer: Policy of not selling concentrate is unchanged. The sale was of old, inferior-grade lead concentrate stock produced during stabilization of the 1 MT mill at RD mine; with strong silver and LME prices, management sold 10 KT rather than derate smelters, realizing ~9 tons silver equivalent and 6,000 tons lead metal content. Revenue from concentrate was ₹315 crores. Remaining stock will now be used internally with smelter shutdowns over. (Arun Misra, Amit Gupta)
FY27 Production & Silver Guidance Confidence
- Question: With Q1 at 260 KT, how confident are you on the 1.1 million ton target? Any upward revision? Also, silver at 149 tons implies ~175 tons/quarter needed for the 680-ton target. (Suman Kumar, Manav Gogia)
- Answer: Confident on 1.1 million tons — straight-line run-rate is already 1,040 KT and Q2-Q3 are seasonally strongest with Q4 typically reaching 280-290 KT; no revision. Silver: Q1 grade was actually better; 10-15 tons locked in WIP and ~9 tons realized via concentrate sale (total ~158 tons). Q2-Q4 mine development targets better silver PPM ore with Q4 maximized; guidance achievable. (Arun Misra)
New Smelter Capacity: Capex & Timeline
- Question: Timeline and capex for the ~600+ KT zinc/lead smelter capacity in conceptualization? (Suman Kumar)
- Answer:
650 KT capacity including mines; board approval expected in Q3 FY27; construction period of ~36 months post approval. Capex estimated at ₹24,000-25,000 crores (2.5x of ~₹12,000 crores for 250 KT), with exact numbers post tendering in ~1 month. (Arun Misra)
Fertilizer & Tailings Project Timelines
- Question: Definitive timeline for the DAP fertilizer plant and unit economics? Recovery and ramp-up for the tailings plant? (Manav Gogia, Sumangal Nevatia)
- Answer: Phosphoric acid plant commissions in Q2 FY27; full fertilizer plant delayed to Q1 FY28 pending environment clearance and other regulatory approvals; ~₹500 crores spent till Q1. Tailings reprocessing: construction just started, 24-month build, expected 30-35 KT zinc output, 6-8 month ramp-up — globally only one similar operation in Australia. (Arun Misra, Amit Gupta)
SEBI RPT Observation & Corrective Actions
- Question: Notes mention SEBI flagged observations on related party transactions — can you elaborate? (Suman Kumar)
- Answer: No financial penalty or restriction was imposed. The issue was that omnibus approvals tracked quantity limits, but value limits were crossed as LME prices rose. An internal SOP now generates an alarm at 80% of the approved value, triggering Audit Committee/Board re-approval. (Arun Misra)
Hedging Position & Q1 Losses
- Question: Any open hedges for FY27 and what were the hedge losses in Q1? (Manav Gogia, Tejas Pradhan)
- Answer: Open hedges: 48 KT zinc at USD3,162/ton and 34 tons silver at USD63/oz; no new hedging done in FY27 given market volatility. Q1 hedge losses were ~₹200 crores. (Amit Gupta)
Government Stake Sale & Dividend Policy
- Question: Any update on the Government of India stake sale? Any change in dividend policy post the Vedanta demerger? (Pratim Roy)
- Answer: Stake sale is for the government to announce; the company cannot comment. Dividend policy unchanged at minimum 30% of profit and 5% of reserves; ₹11/share interim already paid, future dividends are a board decision. (Arun Misra, Amit Gupta)
REE Block: Timeline to Production
- Question: Action plan and timeline for the REE/Yttrium block in Karnataka? (Anirudh Nagpal)
- Answer: Yttrium is used in red LEDs, electronics and medical applications. The block is at G2 level; exploration to establish reserve resource base and mine plan will take 2-3 years, with mining and metallization expected around 2031-32. (Arun Misra)
Cost Outlook & Sulphuric Acid Impact
- Question: Sulphuric acid prices are up ~200% YoY — should COP reduce further in Q2? (Pinakin)
- Answer: Q2 production should cross ~280 KT to meet the 1.1 million ton guidance, driving higher volumes and more acid output; if acid prices hold, cost should improve unless input commodity prices rise. Mineral royalty is a percentage of LME price and does not apply to sulphuric acid, which is not a mineral product. (Arun Misra)
Key Takeaway
Q1 FY27 was a record quarter for Hindustan Zinc: revenue from operations of ₹13,747 crores (+77% YoY), EBITDA of ₹8,074 crores (+109% YoY, 59% margin), and net profit of ₹5,469 crores (+145% YoY), supported by the lowest zinc cost of production excluding royalty since underground transition at USD851/ton (-16% YoY), refined metal output of 260,000 tons (+4% YoY), and silver contributing 46% of profitability. Net cash stood at ₹5,572 crores with an interim dividend of ₹11/share. Management reaffirmed FY27 guidance of ~1.1 million tons refined metal and 680 tons silver. Strategy centers on growth projects — 250 KTPA Debari smelter, tailings reprocessing (30-35 KT zinc), phosphoric acid plant commissioning in Q2 FY27 — and ~650 KT new smelter capacity seeking board approval in Q3 FY27. Watch points include power/fuel cost inflation, open hedges (48 KT zinc, 34 tons silver), and the leadership transition to Mr. Amarendu Prakash effective August 1, 2026.