Vedanta unit shares can rise 25% from current levels, B&K Securities projects

Brokerage firm B&K Securities has initiated coverage on Vedanta-subsidiary Hindustan Zinc Ltd. on Tuesday, December 9, with a "buy" rating and a price target of ₹610.

The price target implies a potential upside of 23% from Monday's closing levels.

HZL is India's only and the world's largest integrated zinc producer, operating a fully integrated value chain across different verticals.

B&K Securities values Hindustan Zinc's zinc and lead segments at 9 times Enterprise Value (EV) to Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) and at 15 times estimated EV/EBITDA for the silver business, while arriving at its base case price target.

The scenario projects Zinc prices to be at $3,000 per tonne, Lead prices to be $2,050 per tonne, and Silver prices at $44 per ounce.

Hindustan Zinc is among the lowest cost producers of Zinc globally, and at $994 per tonne during the second quarter, the figure is 30% lower than its global peer average of anywhere between $1,300 to $1,400 per tonne.

The board of Hindustan Zinc has also approved a capex plan of up to ₹30,000 crore for the phase I of its plan to double integrated refined metal production capacity over the next five years.

Hindustan Zinc's silver production provides substantial earnings leverage to the structural Silver bull market. B&K Securities expects the near-term Silver contribution to rise to 42% of the company's EBITDA in financial year 2027 from 28% currently.

The company sold 120 tonnes of Silver at $37 an ounce in the second half out of their total 400 tonnes of Silver production, 120 tonnes will be sold on the hedged price and the remaining at the spot market price, the brokerage wrote in its note.

B&K Securities also believes that the near-term growth is being supported by the 160 KTPA Debari Roaster, the Dariba Smelting Complex cell-house de-bottlenecking and the Chanderiya Lead-Zinc Smelter cell-house de-bottlenecking, all of which will take place within the current financial year.

17 analysts have coverage on Hindustan Zinc, of which eight have a "buy" rating, three say "hold", while six have a "sell" rating on the stock.

Shares of Hindustan Zinc are trading 0.2% higher currently at ₹491.45. The stock is up 10.6% so far in 2025.