Hindustan Zinc share price rally draws Jefferies' attention, says 'Buy' for 18% upside

Brokerage firm Jefferies has initiated coverage on Vedanta's subsidiary Hindustan Zinc Ltd. with a "buy" recommendation on Monday, December 15.

Jefferies' recommendation comes with a price target of ₹660 per share, which implies a potential upside of 18% from Friday's closing levels.

The brokerage expects Hindustan Zinc's Earnings per Share (EPS) to rise by 22% and 29% respectively in financial year 2026 and 2027, and by another 7% in financial year 2028. Their EPS estimates are 9% to 31% above street expectations, the note said.

At the current price, Hindustan Zinc trades at a financial year 2027 estimated Enterprise Value to Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) (EV/EBITDA) multiple of 9.2 times, which is higher than the last 10-year average of 7.3 times. However, Jefferies says that the valuation premium is justified, due to the rising share of Silver in its pre-tax earnings.

Global Silver prices have risen over 120% so far in 2025, making new records close to the $65 an ounce mark. Hindustan Zinc is the only listed pure Silver play in India. Silver contributes to around 40% of its overall EBIT. By the second quarter of financial year 2029, Hindustan Zinc aims to expand its Silver capacity by 4% to 830 tonnes per annum, and refined metal capacity by 34% to 1.5 MTPA.

Jefferies' assumptions factor in Zinc prices to be between $3,225 - $3,250 per tonne in the second half of financial year 2026 to 2028, which is 4% below spot price, and Silver prices to range between $56 to $60 an ounce for the same time frame, which is 3% to 10% below the spot price.

Over financial year 2026-2028, Jefferies expects Free Cash Flow to range between ₹8,000 crore to ₹14,800 crore per year and Return on Equity to range between 69% to 85% during the same time period.

18 analysts have coverage on Hindustan Zinc, of which nine of them have a "buy" rating, three say "hold", while six have a "sell" recommendation.

Shares of Hindustan Zinc had their best week since May 2024 last week with a 13% advance. The stock though, still trades 30% below its record high of ₹807, which it had surged to in May 2024 as well.