Hindustan Zinc Q3 Results: Will there be an impact of silver price surge on company’s profit?

Synopsis: Hindustan Zinc’s earnings are closely linked to silver prices, which have surged 73 percent in Q3FY26, following an 18 percent rise in silver revenue in Q2 when prices increased 33 percent. This strong price momentum is expected to boost realisations, revenue, and profitability, highlighting silver as a key driver of the company’s financial performance.

Hindustan Zinc, a leading global producer of zinc and silver, operates in a market where commodity prices play a significant role in shaping its profitability. Among these, silver forms an important part of the company’s revenue mix, and recent movements in silver prices have drawn attention from investors and analysts alike.

How these price changes could influence Hindustan Zinc’s earnings depends on multiple factors, including production levels, operating costs, and any hedging strategies the company may have in place. Read on to understand the potential impact in detail.

Silver Price Movement

Silver prices per kg have witnessed a strong upward trend and are currently trading at Rs. 2,49,515. Over the last one year, prices have risen from Rs. 89,593 per kg, delivering a return of around 178.5 percent. In the past six months, silver has moved up from Rs. 1,06,603 per kg, marking a gain of nearly 134 percent, while over the last three months, prices have increased from Rs. 1,39,365 per kg, translating into a return of about 79 percent. On a longer-term basis, silver prices have climbed sharply from Rs. 68,656 per kg over the past five years, generating a return of approximately 263.42 percent, reflecting sustained strength in the metal.

Why Does the Silver Price Fluctuates? 

Silver prices fluctuate due to a combination of global economic, industrial, and market factors. As both a precious metal and an industrial commodity, silver is influenced by investor demand, inflation expectations, and movements in gold and other metals. Industrial demand from sectors like electronics, solar panels, and medical equipment can drive prices up or down, while global economic uncertainty or changes in interest rates often lead investors to buy or sell silver as a safe-haven asset. Currency fluctuations, especially in the US dollar, also play a key role, making silver prices highly sensitive to both market sentiment and real-world demand.

About the Company

Hindustan Zinc Limited, incorporated in 1966 and headquartered in Udaipur, India, is a Vedanta Group company and a subsidiary of Vedanta Limited. It is the world’s largest integrated zinc producer and among the top five silver producers globally, with around 77 percent market share in India’s primary zinc market. The company operates across zinc, lead, silver, and wind energy segments, produces a range of metals, alloys, and by-products, runs captive renewable and thermal power plants, and supplies its products to over 40 countries worldwide.

Financial Outlook

In Q2FY26, the company reported a revenue of Rs. 8,525 crore, marking a YoY growth of 3.5 percent from Rs. 8,242 crore in Q2FY25 and a QoQ growth of 10.4 percent from Rs. 7,723 crore in Q1FY26. EBITDA for the quarter stood at Rs. 4,426 crore, up 7.8 percent YoY from Rs. 4,104 crore and 16 percent QoQ from Rs. 3,816 crore, reflecting healthy operational performance. Profit for Q2FY26 reached Rs. 2,632 crore, showing a 14.5 percent increase YoY from Rs. 2,298 crore and a 19.5 percent rise QoQ from Rs. 2,204 crore. 

Over the past five years, the company has demonstrated strong growth, achieving a revenue CAGR of 13 percent, a profit CAGR of 9 percent and a price CAGR of 21 percent, reflecting both its operational performance and market confidence.

A return on equity (ROE) of about 72.4 percent and a return on capital employed (ROCE) of about 60.7 percent and debt to equity ratio at 0.82, demonstrate the company’s financial position. At the moment, the company’s P/E ratio is 26.1x lower as compared to its industry P/E 36.1x.

How silver prices impact Hindustan Zinc Earnings?

Silver prices play an important role in shaping Hindustan Zinc’s financial performance, as the company is one of the largest silver producers globally. Changes in silver prices directly influence the value of silver sales, affecting revenue and margins, while also impacting cash flows.

In Q1, Hindustan Zinc reported silver sales of Rs. 1,427 crore with sales volume of 145 metric tonnes, which implies an average realisation of about Rs. 9.84 crore per metric tonnes (Rs. 1,427 ÷ 145). In Q2, silver sales increased to Rs. 1,706 crore on volumes of 147 metric tonnes, implying a higher realisation of around Rs. 11.61 crore per metric tonnes (Rs. 1,706 ÷ 147).

This shows that the average revenue per metric tonnes of silver rose by about 18 percent from Q1 to Q2, even though volumes increased only marginally. The improvement in realisation clearly indicates better pricing rather than volume-led growth.

Supporting this trend, silver prices rose sharply during the period, increasing from Rs. 106,737 per kg on 1 July 2025 to Rs. 142,594 per kg on 30 September 2025, which represents an upside of around 33.6 percent. This strong rise in silver prices explains the higher realisations and underscores why silver can meaningfully boost Hindustan Zinc’s earnings.

When silver prices increased by about 33 percent, the company’s silver revenue rose by 18 percent, showing a clear positive linkage between prices and earnings. In Q3, silver prices have further increased from Rs. 1,44,026 per kg as on 1 October 2025 to Rs. 2,49,515 per kg (CMP), which implies a sharp rise of around 73 percent.

This indicates that just as higher silver prices in Q2 led to improved realisations and revenue growth, the continued and much stronger increase in silver prices during Q3 is likely to support further growth in Hindustan Zinc’s silver revenue.

Conclusion

The recent surge in silver prices is likely to influence Hindustan Zinc’s Q3 performance. With silver prices rising sharply during the quarter, the company stands to benefit from higher realizations, potentially supporting revenue growth and profitability. This could continue the positive momentum seen in Q2, highlighting the sensitivity of Hindustan Zinc’s earnings to movements in silver prices.

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