Nuvama has retained its reduce rating on Hindustan Zinc with a target price of ₹591 per share, after the company reported a solid but largely in-line third-quarter performance.
The brokerage said Q3 EBITDA stood at ₹60 billion, rising 36% quarter-on-quarter, driven by higher commodity prices, better volumes and lower costs. A key highlight of the quarter was the sharp surge in silver profitability, with silver EBIT jumping 56% QoQ to ₹22.9 billion, accounting for 44% of total EBIT.
Nuvama noted that the company has adopted a prudent hedging strategy, with 7% of FY27E zinc volumes hedged at USD 3,117 per tonne and 8% of silver volumes hedged at USD 58 per ounce, offering some downside protection. Incorporating higher assumed commodity prices, the brokerage has lifted its FY27E and FY28E EBITDA estimates by 28% and 21%, respectively.
However, Nuvama remains cautious on valuation, highlighting that the stock trades at 11.1x FY28E EV/EBITDA, which it considers expensive despite strong near-term earnings momentum. While commodity tailwinds are supportive, the brokerage believes upside is increasingly priced in.
Disclaimer: The views and recommendations above are those of Nuvama. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
