Hindustan Zinc's FY27 Cash Flow Rides on Zinc and Silver Prices Amid Optimism Over Rs 16,000 Crore Free Cash Flow

Hindustan Zinc Expects to Generate Rs 16,000 Crore in Free Cash Flow in FY27

Hindustan Zinc, a Vedanta group company, is anticipating a significant increase in free cash flow (FCF) to Rs 16,000 crore in the fiscal year 2027 (FY27). This expectation is largely tied to the current bullishness in the London Metal Exchange (LME) zinc and silver prices, which the management believes will sustain at present levels.

The LME zinc prices have seen a sharp year-on-year (YoY) increase of nearly 27% as of late April 2026, with prices hovering between $3,360 and $3,485 per tonne. The silver prices have also seen a significant increase, rising by $75 per ounce as of April, more than double the $33 recorded last April.

Key Financial Highlights

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The company's cash flow guide is important amid its ambitious capital expenditure (capex) plans. Hindustan Zinc has also hiked the interim dividend to Rs 11 per share, up from Rs 10 per share declared for the entire FY26, which would represent an outgo of over Rs 4,600 crore.

Given the current tailwinds to earnings from commodity prices, an analyst asked whether the company plans to conserve cash in view of the upcoming capex or if it sees a higher payout ratio to shareholders. The company's management responded by stating that the dividend is being paid out of retained earnings, which are around Rs 22,000 crore.

The company's total expenditure for expansion over the next four to five years is expected to be around Rs 30,000–Rs 35,000 crore. Even at the current level of LME prices, the available free cash flow could be around Rs 16,000 crore, if profitability continues and the company delivers the same volume growth as per guidance.

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Hindustan Zinc is also betting on its low-cost production strategy to aid margins if macro uncertainties persist. The company's cost of production is significantly lower than others in the industry, which puts it in a strong position. Even in the worst year, during COVID in FY21, the company delivered much better profitability of almost Rs 8,000 crore.

However, given the current macro issues, the company could see input costs increase amid rising commodity costs of diesel, gas, explosives, etc. The company sees its zinc cost of production at $975 - $1,000 per tonne in the current financial year, up from $959 in FY26.

Despite the rising input costs, the company believes that the gains from higher zinc and silver prices, along with rupee depreciation, outweigh the rising input costs. The company's management described the current war environment as "beneficial" for the company.