Vedanta Group's Strong 122.28% RoE Stock Hot To Buy, 23% Potential Upside Seen; JM Sets Rs 540 TP

Hindustan Zinc Share Price: Vedanta Group-backed zinc giant, Hindustan Zinc Ltd (HZL) share price has tumbled more than 3% on BSE. The company has been trending after its Q4 results which was better than expected. Following its capacity expansion which is on track, Hindustan Zinc stock price is hot to buy, with potential upside of 23% ahead. Accordingly, there is a buy-on-dips opportunity.

Hindustan Zinc Share Price:

Hindustan Zinc share price closed at Rs 438.80 apiece on BSE on the last session of April. The company's market cap is around Rs 1,85,407.00 crore as of April 30, 2025. However, in past five sessions, the HZL stock price has plunged by at least 3.15%. YTD, HZL stock is down by a meager 1.23%.

Despite the bearish performance, HZL has one of the strongest return on equity (RoE) on BSE and NSE. Its RoE is around 122.28% as of April 30th. While its price-to-equity ratio is balanced at around 19.84x, as per BSE data.

Hindustan Zinc Share Price Recommendation:

"Hindustan Zinc reported 4Q consolidated EBITDA of INR48bn, higher than JMfe of INR45bn driven by lower costs partially offset by lower realizations. Zinc CoP declined significantly to USD994/t vs USD1,041/t in 3Q led by better metal grades and subdued coal prices," analysts at JM Financial said in a note.

After the management call, JM Financial analysts highlighted that a) volume guidance for FY26 at 1,090 - 1,110 kt refined metal / 700-710 tons for silver b) Zinc CoP guidance for FY26 at USD1,025 - 1,050 with CoP for FY25 at USD1,052 c) growth capex guidance for FY26 at USD225-250mn d) capacity expansion to 2 mn tons to happen in phases with first phase being 1.2mn to 1.5mn tons - to be announced over the next few months e) capacity expansion remains on track with 160ktpa Debari roaster to be commissioned in 1QFY26 f) 510ktpa fertiliser plant remains on track and is expected to be completed by 4QFY26. The company's net debt position as of 31st Mar'25 stood at INR12bn vs INR41bn as of 31st Dec'24 driven by lower borrowings and a better cash position.

Accordingly, on the valuation, JM's note said, " We remain positive on HZL given its presence in the lower end of the global cost curve facilitated by high-grade captive mines sufficient to meet requirements for decades, 100% captive power plants, sizeable scale, diversified revenue stream with increasing contribution from silver sales. Maintain BUY."

The target price is set at Rs 540, which hints at over 23% potential upside from the current market price.

During Q4FY25, Hindustan Zinc reported highest ever revenue of Rs 9,087 crores, up 20% YoY. While EBITDA stood robust at Rs 4,816 crores, up 32% YoY along with industry-leading EBITDA margin of c.53% up c.500 bps YoY. Also, HZL reported the best 4Q Profit after tax of Rs 3,003 crores, up 47% YoY. That being said, HZL delivered the 16-quarter lowest zinc cost of production of $ 994/MT, better by 5% YoY.

Sandeep Modi, Chief Financial Officer, said, " Despite the global uncertainties, including recent market volatility from the ongoing trade war, our fundamentals remain robust. With a strong balance sheet, structurally leaner cost base and clear strategic direction, Hindustan Zinc is well-positioned to navigate external headwinds and continue delivering consistent, industry-leading returns."

FY25 revenue was second highest at Rs 34,083 crores, up 18% YoY, while FY25 PAT was also second best at Rs 10,353 crores, up 33% YoY.

About Hindustan Zinc:

Hindustan Zinc, a Vedanta Group company, is the world's largest integrated zinc producer and is amongst the top 5 silver producers globally. The company supplies to more than 40 countries and holds a market share of about 77% of the primary zinc market in India. Hindustan Zinc has been recognized as the world's most sustainable company in the metals and mining category for the second consecutive year by the S&P Global Corporate Sustainability Assessment 2024, reflecting its operational excellence, innovation, and leading ESG practices.