Hindustan Zinc hits new high in weak market; zooms 49% thus far in April

Shares of Hindustan Zinc hit a new high of Rs 434.80, as they rallied 8 per cent on the BSE in Friday’s intra-day trade in an otherwise weak market amid back of heavy volumes.

Thus far in the month of April, in nine trading days, the stock of the metal company has zoomed 49 per cent.

Hindustan Zinc, a Vedanta Group company, is the world's second largest integrated Zinc producer and fifth largest Silver producer. The company governs about 80 per cent of the growing Zinc market in India with its headquarters at Udaipur along with Zinc Lead mines and smelting complexes spread across the state of Rajasthan.

In March quarter (Q4-FY24), Hindustan Zinc recorded highest-ever quarterly refined metal production at 273 kt, up 6 per cent sequentially on account of better plant availability and up 1 per cent YoY.

Silver recorded the highest volume in FY24 in line with management’s operational & financial strategy, at 24.0 moz up 5 per cent YoY.

Silver has been witnessing sharp swings in prices over the last few quarters, influenced by a complex interplay of factors spanning economic data points, geopolitical tensions, and market-specific dynamics.

According to Motilal Oswal Financial Services (MOFSL) Precious Metals Quarterly report, Silver will be strongly positive over the next few months, but whether it will be a straight upside or with volatility is difficult to time. MOFSL advises to be invested in silver and keep adding on dips towards Rs 75,000 for a medium to long term upside towards Rs 92,000 followed by Rs 100,000.

Hindustan Zinc, in December quarter (Q3-FY24) earnings call said, in India, the industrial consumption of silver is relatively lower as compared to global levels and is expected to increase going forward on the back of new-age technological developments, like EVs and 5G, and shifting priorities towards renewable energy, etcetera.

Silver market has been in deficit in 2023 for the third consecutive year in a row, considering the current macroeconomic environment and the supply and demand dynamics, the management holds a strong positive outlook for silver prices.

Regarding the zinc outlook, usage anticipated rise in India, Mexico, China and Vietnam on the back of increased focus on infrastructure, while the demand in Europe and US is likely to remain flat.

Going ahead, net prices of lead are expected to remain reasonably supported by healthy demand, driven by the automotive industry and relatively tight supply due to recent suspensions.

Meanwhile, in the domestic market, PLI schemes and emerging cash-rich middle-class families are expected to fuel the expansion of the automobile industry, thereby supporting lead demand.