Hindustan Zinc strikes gold on silver rally

Mumbai: Hindustan Zinc clocked in its highest ever profit, sales and earnings before interest, tax, depreciation and amortization in the December quarter, underpinned by a sharp rally in silver prices, increased production and lower costs.

The Anil Agarwal-owned company is optimistic of a further improvement in these metrics in the March quarter.

“Typically, we have always posted our best ever results in quarter four, and I am sure it should not be any different this time,” Arun Misra, chief executive officer of the company, told ET.


Hindustan Zinc, which is the largest producer of silver in the country, produced 158 tonnes of silver in the December quarter, which was 10% more than the September quarter. It has produced 451 tonnes of silver in the nine months of this fiscal, and is aiming a total production of 680 tonnes for the year.

“We should be able to produce more (silver) because our fumers (plant) have come into place,” Misra said. “We also expect to continue our work in the mines to ensure we get better grades of concentrate so that we get more silver out of it.”

In October, Hindustan Zinc had said that the production of silver would be 30% higher in the second half of the fiscal as compared with the first. This comes at a time when silver prices have seen a sharp rally in the last few months and are currently at an all-time high.

In the December quarter, the average prices of silver were 74% higher compared with the previous year, and 39% higher sequentially. For Hindustan Zinc, the silver business contributed to as much as 44% of the total EBITDA.

Consolidated revenue for the quarter stood at an all-time high of Rs 10,980 crore, up 27% on-year, while EBITDA for the quarter stood at Rs 6,087 crore, up 34% on-year. Profit for the quarter was also at an all-time high of Rs 3,916 crore, up 46% as compared with the previous year.

The company produced 270,000 tonnes of refined metal during the quarter, up 4% on-year and 9% higher as compared to the previous quarter. Its cost of production for zinc was at $940 per tonne, the lowest in five years.

This helped EBITDA margin for the December quarter improve to 55%, up 270 basis points compared with the previous year, and 320 basis points sequentially.

“Our silver production improved, cost was lower and prices were better. So all put together—volume, cost and prices gave us better margins,” Sandeep Modi, chief financial officer of the company, said. “While prices are not in our control, we will continue to work on improving the volume and cost.”

Hindustan Zinc reported its earnings during market hours on Monday. Its shares closed at Rs 661.20 apiece on the BSE, up nearly 4% from the previous close.