Citi has maintained its sell rating on Hindustan Zinc with a target price of ₹585 per share, even as the company delivered a strong operational performance in the third quarter.
The brokerage said 3Q EBITDA rose 35% year-on-year, supported by better silver prices, a weaker rupee, lower costs and higher volumes. Silver prices averaged USD 55 per ounce versus USD 31 a year ago, while zinc prices were marginally higher year-on-year. Lead prices, however, were slightly lower.
Sequentially, EBITDA increased 36% quarter-on-quarter, driven by stronger zinc and silver prices, currency benefits and a 5% decline in costs. Citi noted that cost of production (ex-royalty) fell to USD 940 per tonne from USD 994 in Q2, while EBITDA margins improved to 55% from around 52% in both the previous quarter and last year.
Despite the strong operating metrics, Citi remains cautious on valuation. The brokerage highlighted that Hindustan Zinc is targeting 2% refined volume growth in FY26, with cost guidance of USD 1,000 per tonne, broadly in line with recent trends.
Citi believes much of the commodity-driven upside is already priced in and continues to see limited risk-reward at current levels, underpinning its sell stance.
Disclaimer: The views and recommendations above are those of Citi. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
