Strong metal prices help Hindustan Zinc kick off FY27 on a high note

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Mumbai: Hindustan Zinc kicked off the financial year on a strong note, as higher metal prices, a weaker rupee and increased production helped India's largest zinc and silver producer beat Street estimates and post a more than two-fold jump in first-quarter profit.

Vedanta Group's biggest cash generator posted a consolidated net profit of ₹5,469 crore for the quarter ended 30 June, up from ₹2,234 crore a year earlier, according to exchange filings. The net income exceeded the Bloomberg consensus estimate of ₹5,052 crore based on a poll of six analysts.

Revenue from operations surged 77% year-on-year to a record ₹13,747 crore, driven by higher metal production, stronger prices for zinc and silver, and the sale of lead concentrate. Earnings before interest, tax, depreciation and amortisation (Ebitda) more than doubled to an all-time high of ₹8,074 crore, while the Ebitda margin expanded to 59% from 50% a year ago.

The company's strong showing came as benchmark zinc prices averaged $3,466 per tonne during the quarter, while a weaker rupee boosted realizations.

Hindustan Zinc also reported its lowest quarterly zinc cost of production, excluding royalty, since shifting to underground mining, helping further lift profitability.

"We are pleased to begin FY27 with a strong quarter marked by solid operational and financial performance and continued execution of our strategic priorities," Arun Misra, chief executive officer and whole-time director, said during the post-results earnings call.

The Vedanta Group company has appointed Amarendu Prakash, former chairman and managing director of Steel Authority of India, as the new CEO starting 1 August. Outgoing CEO Arun Mishra, in his interaction with analysts, said that having worked with Prakash, he is confident that “his vision, deep industry expertise and proven leadership will guide the company to even greater heights”.

Mint first reported that Arun Misra is set to become the Group CEO of Vedanta Ltd, transitioning from his role as the CEO of Hindustan Zinc on 15 June and that Prakash is the frontrunner to take over.

During the quarter, the company also appointed Amit Gupta as the Chief Financial Officer of Hindustan Zinc Limited with effect from 1 June. Both Prakash and Gupta attended the company’s quarterly conference interaction with analysts.

The company produced its highest-ever first-quarter mined metal output of 268,000 tonnes, marking the fifth consecutive year of record June-quarter production. Refined metal production rose 4% year-on-year to 260,000 tonnes, supported by better ore grades, debottlenecking initiatives and the commissioning of an additional roaster.

On costs, Misra said the company achieved "the lowest quarterly zinc cost of production excluding royalty since underground transition at $851 per tonne," aided by higher grades, increased renewable energy use and better by-product realization.

Silver remained a key earnings driver, contributing about 46% of overall profitability. During the quarter, Hindustan Zinc also monetized 10,000 tonnes of old lead concentrate inventory, generating about ₹315 crore in revenue and realizing the equivalent of about nine tonnes of silver.

Explaining the one-time sale, Misra said the company had disposed of lower-grade concentrate stock accumulated during the stabilization of its new mill that was unusable in their smelters "We took the opportunity of high LME prices... creating value for all of us," he said, adding that the company continues to follow its policy of not routinely selling concentrate.

Misra retained its full-year mined metal production guidance of 1.1 million tonnes, expressing confidence after a strong first quarter.

"We won't have any further shutdowns, and we will deliver on our commitment of 1.1 million tonnes," Misra said, noting that production typically improves in the second half of the year.

The company ...