Hindustan Zinc Limited Delivers Strong Fiscal 2025 Results Amid Operational Gains and Expansion Hopes

Hindustan Zinc Limited, India’s largest integrated zinc producer and a subsidiary of Vedanta Limited, has reported robust financial results for its fiscal year 2025 (FY2025), ending March 31, 2025. The company’s net profit surged by 33% year-on-year (YoY) to ₹10,353 crore, while revenue from operations reached ₹34,083 crore, marking a 17.8% YoY increase. These figures underscore the firm’s operational resilience and strategic execution in a challenging global commodities landscape.

Financial Highlights: Profitability and Dividend Bonanza

• Net Profit: The ₹10,353 crore net profit for FY2025, up from ₹7,764 crore in FY2024, was driven by higher production volumes and improved margins. Q4 FY2025 alone contributed ₹3,003 crore, a 47% jump from ₹2,038 crore in Q4 FY2024.
• Revenue: Revenue growth was fueled by strong zinc and lead prices, with total income crossing ₹35,066 crore, including non-operational gains.
• Margins: The operating margin expanded to 41% for FY2025 from 35% in FY2024, reflecting cost optimization and scale efficiencies.
• Dividend: Shareholders received an interim dividend of ₹29 per share, totaling ₹12,253 crore, marking one of the highest dividend payouts in the company’s history.

Operational Excellence: Production Records and Sustainability

Hindustan Zinc’s operational performance set new benchmarks in FY2025:
- Mined Metal: Production hit a record 1,095 kilo tonnes (kt), a 12% increase from FY2024, driven by higher ore grades and improved mill recovery. Q4 FY2025 saw a 17% quarter-on-quarter (QoQ) rise to 310 kt, the highest quarterly output ever.
- Refined Metals:
- Zinc: Output rose to 214 kt in Q4 (5% QoQ), contributing to an annual total of 827 kt.
- Lead: Production reached 56 kt in Q4 (2% QoQ), with FY2025 totals at 219 kt.
- Silver: Saleable silver hit 177 metric tonnes (mt) in Q4 (10% QoQ), aligning with higher lead output and reduced work-in-progress inventory.
- Renewable Energy: Wind power generation surged to 63 million units (MU) in Q4 (33% QoQ), reflecting the company’s commitment to sustainability.

Earnings Call Insights: Expansion Plans and Challenges

During the April 25 earnings call, management outlined strategic priorities:
1. Capacity Expansion:
- A phased increase from 1.2 million tonnes to 2 million tonnes by FY2027, starting with a 1.45 million tonnes target by FY2026.
- Smelter upgrades and roaster commissioning in February 2025 aim to boost refined metal output.
2. Hedging Gains:
- A ₹58 crore hedging gain was recorded in the first nine months of FY2025, with ₹64 crore in other comprehensive income to be recognized in Q4.
3. Subsidiary Growth:
- Hindustan Zinc Alloy, a new venture, generated ₹43 crore EBITDA in Q3, targeting ₹200 crore annually at peak capacity.
4. Challenges:
- Visa Delays: Operational hiccups due to visa processing delays for Chinese partners.
- Silver Shortfall: Mine sequencing changes and plant shutdowns may reduce annual silver output to 680 mt, below the 700–710 mt target.
- Renewable Targets: Wind energy contributed only 15% of total energy use, lagging the 25–30% goal, due to fumer system inefficiencies.

Investment Considerations: Risks and Opportunities

• Growth Catalysts:
• The capacity expansion plan and rising zinc prices (up 15% YoY in FY2025) could sustain revenue growth.
• Strong balance sheet with ₹16,000 crore cash reserves provides flexibility for investments and dividends.
• Risks:
• Commodity Volatility: Zinc prices remain tied to global demand cycles, particularly in construction and automotive sectors.
• Regulatory Hurdles: Delays in environmental clearances or labor disputes could disrupt production.
• Sustainability Gaps: Falling short of renewable energy targets may invite investor scrutiny.

Conclusion: A Strong Foundation with Upside Potential

Hindustan Zinc’s FY2025 results reflect a company leveraging its scale and operational discipline to deliver record profits. With a 33% net profit growth, ₹29 per share dividend, and clear expansion plans, the firm is positioned to capitalize on long-term demand for base metals. However, execution risks—such as visa delays and renewable energy underperformance—must be monitored.

Investors should note that the stock, up 1.07% year-to-date but down 14% over six months, appears undervalued at a P/E ratio of 12.5x, compared to its five-year average of 15x. The 17.8% revenue growth and 41% operating margin provide a solid base for future gains, especially if the company meets its capacity targets and improves renewable energy efficiency. For those willing to bet on India’s industrial growth and the firm’s execution prowess, Hindustan Zinc remains a compelling play in the metals sector.

Final Note: As of April 25, 2025, Hindustan Zinc’s stock traded at ₹453.20, reflecting investor optimism. Monitor upcoming zinc price trends and Q4 FY2026 results for further insights.