The decline followed a sharp correction in silver prices, which fell by as much as Rs 7,000 per kilogram, or 2.75%, to Rs 2,43,704 on the Multi Commodity Exchange of India. Silver exchange-traded funds also edged lower, reflecting weakness in the underlying metal.
The sharp correction in Hindustan Zinc is seen as a result of profit booking after a strong rally in 2025, when the stock surged nearly 40%. Looking ahead, all eyes are on US jobs data due later this week.
Hindustan Zinc, which produces refined silver with a minimum purity of 99.9%, has seen its shares rally strongly over the past year. The stock climbed from around Rs 400 to above Rs 600, raising concerns among some market participants about the scope for further near-term gains.
“Hindustan Zinc could continue to do well as long as silver prices remain high because profitability increases significantly. But the stock has already run up sharply, leaving limited upside for fresh investors,” said Sameer Dalal, CEO of Natverlal & Sons Stockbrokers.
Long-term story intact?
In December, Jefferies, while initiating coverage on Hindustan Zinc, said it views the company as a clear beneficiary of elevated silver and zinc prices, supported by its first-decile zinc mining costs. While volume growth is expected to remain modest, earnings momentum is projected to stay strong. EPS is estimated to grow 22% in FY26 and 29% in FY27, followed by another 7% rise in FY28.
The brokerage expects robust cash generation and healthy return ratios, with FY26-28 EPS estimates placed well above broader Street expectations. The brokerage has a target price of Rs 660, an upside potential of 5%.
What should investors do?
Technically, the picture remains constructive. The stock has resumed its broader uptrend after a prolonged consolidation, decisively breaking out of the Rs 480-500 base. Rising volumes confirm the strength of the move. As long as Hindustan Zinc holds above the Rs 560-580 zone, the trend remains positive, with potential upside toward Rs 650-680. On the downside, Rs 540-550 is seen as a key medium-term support, Ajit Mishra of Religare Broking told ETMarkets.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)