Hindustan Zinc Shares Jump 5% On Bullish View, Receding OFS Fears; Hindalco Subdued

Mumbai, August 26: Hindustan Zinc shares gained as much as 5% on Wednesday after a broker raised its target price citing a stronger earnings outlook driven by firm zinc and silver prices. The brokerage retained its ‘Buy’ rating on the Vedanta Group company, while also preferring Hindustan Zinc over Hindalco amid a favourable divergence in commodity prices. As of writing Hindustan Zinc was up 5.4% at Rs 625. 

Zinc, Silver Prices Support Earnings Outlook 

The broker raised its FY27-FY29 earnings estimates for Hindustan Zinc by 10-11%. The brokerage said spot zinc prices were around 15% above their June-quarter average, while silver prices had recovered 23% from their July lows.

Hindustan Zinc jumped on bullish view, receding OFS fears. Source: NSE 

Hindustan Zinc vs Hindalco 

The broker maintained a more cautious stance on Hindalco Industries, retaining its ‘Hold’ rating while raising the target price to ₹1,140. The brokerage cut its FY27-FY29 earnings estimates for Hindalco by 2-3% as aluminium prices remain around 10% below their June-quarter average. 

The contrasting outlook reflects the recent divergence in metal prices. The broker expects stronger zinc and silver prices to provide a meaningful earnings tailwind for Hindustan Zinc, while weaker aluminium prices could weigh on Hindalco’s profitability. The brokerage therefore said it prefers Hindustan Zinc over Hindalco at current levels. 

Government Stake Sale Concerns Ease 

The positive brokerage call came alongside a separate trigger for Hindustan Zinc shares. DIPAM Secretary Arunish Chawla said the government was not currently looking at selling its stake in Hindustan Zinc, easing concerns over a potential offer for sale that had weighed on the stock in the previous session. 

The government owns 27.92% of Hindustan Zinc, while promoter Vedanta holds 60.71%. Earlier reports had suggested the government could consider selling around 1.5% of its holding during the current fiscal year. The latest comments reduced expectations of an imminent supply of shares through an OFS. 

Stock Performance 

Hindustan Zinc shares had declined 1.89% on Tuesday amid renewed speculation around a potential government stake sale. The stock subsequently rebounded strongly on Wednesday, while Hindalco remained largely subdued. 

The combination of easing OFS concerns and bullish view on zinc and silver has therefore provided a double boost to Hindustan Zinc. With the brokerage’s target implying substantial upside from Tuesday’s close, investors are likely to track commodity prices, the global zinc supply-demand balance and the government’s stance on its holding as key triggers for the stock. 

Source

• https://www.nseindia.com/get-quote/equity/HINDZINC/Hindustan-Zinc-Limited