Hindustan Zinc Stock Surges 7% as Demerger Plans Gain Momentum for FY27

Hindustan Zinc Stock Rises Sharply Amid Demerger Update and Strong Silver Outlook

Shares of Hindustan Zinc Ltd surged on Monday, with the stock gaining over 6 percent after the company indicated that work on a potential demerger could begin in FY27. By late afternoon trade on April 27, the Hindustan Zinc stock was trading at Rs 627.65, up 6.65 percent on the day.

The stock has seen significant growth over the past year, with a gain of 38.7 percent, outperforming the Nifty 50, which has declined about 1 percent during the same period. Hindustan Zinc was also the second top gainer on the Nifty 100 index among largecap stocks, after Sun Pharma.

The sharp move in the stock comes after CEO Arun Misra announced that the company is re-looking at the proposal to demerge its business, although the group's immediate focus remains on the broader Vedanta Ltd demerger. The CEO indicated that some groundwork on the Hindustan Zinc demerger could begin in FY27, signaling that the process is back on the strategic agenda.

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Hindustan Zinc had earlier proposed a demerger of its zinc, lead, silver, and recycling businesses, but the plan faced resistance from the government in 2024, which questioned its benefits to shareholders. The proposal is now being revisited, with management making it clear that priority remains on the ongoing restructuring at Vedanta Ltd, the promoter and majority shareholder of Hindustan Zinc Ltd.

Under Vedanta's demerger plan, the parent will retain its stake in Hindustan Zinc. Any potential split in Hindustan Zinc would be positioned as a subsequent, second-stage restructuring exercise rather than an immediate move.

| Comparison of Stock Performance | | --- | --- | | Hindustan Zinc | Nifty 50 | | Gain over past 1 year | 38.7% | -1% | | April 27 stock price | Rs 627.65 | |

Apart from the demerger update, the management outlined a strong outlook for its silver business, which is expected to contribute around 50 percent of EBITDA going forward. The company expects silver markets to remain in deficit for the next one to two years amid rising demand across segments. It targets sales volume of 680 tonnes in FY27 compared to 627 tonnes in FY26.

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The management also indicated that the "new normal" price range for silver has shifted higher to $55-75 per ounce from the earlier $35-45 range.

On the base metals side, the company expects zinc prices to remain in the range of $3,100-3,300 per tonne and said it is focusing on increasing zinc output relative to lead. Cost pressures remain, with production costs expected at around $1,000 per tonne, up by about $25 per tonne due to global factors. However, operating leverage and higher renewable energy usage are expected to help contain costs.

Hindustan Zinc is also preparing for the next phase of expansion, with plans to announce a Phase 2 expansion, including a smelter capacity addition of 650,000 tonnes, in its July-August board meeting.