Hindustan Zinc Ltd (HINDZINC) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to the second quarter FY '27 earnings conference call hosted by Hindustan Zinc. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. I now hand the conference over to Ms. Raksha Jain, Director of Investor Relations of Hindustan Zinc. Thank you, and over to you.
Raksha Jain (Hindustan Zinc Ltd): Thank you, operator, and good evening, ladies and gentlemen. Thank you for joining us today to discuss the second quarter and half year results of FY '27. In this call, we will refer to our investor presentation available on
Raksha Jain (Hindustan Zinc Ltd): company website. Please note that today's entire discussion will be covered by the safe harbor clause mentioned on slide two of the presentation. Today's call is joined by our CEO, Mr. Arun Misra and our CFO, Mr. Amit Gupta who will also be interacting with you during the call. The management will be discussing the operational and financial updates for the quarter followed by a Q&A session. Now I would like to invite Mr. Arun Misra to present the results. Over to you, sir.
Arun Misra (Hindustan Zinc Ltd): Thank you, Raksha. A very good evening to all of you. Thank you for joining us today. Happy to report that we are sustaining our strong momentum in the second quarter delivering solid operational and financial performance while we continue to focus on our strategic priorities. Our cost competitiveness and disciplined execution has helped us in sustaining this momentum. If I look at the how we define our success, of course safety remains a core measure of our operating performance. In this quarter we have recorded zero fatalities across the whole operations. We are committed to achieving net-zero by 2050 as already informed. We are increasing our renewable energy basket. In this quarter, the renewable energy accounted for 27% of our power consumption which we intend to take to 35% in the quarters to come. In one of our subsidiaries, HZAPL, Hindustan Zinc Alloys Private Limited I'm happy to report that the subsidiary is using 100% renewable power now. We also introduced our first electric train at Rajpura Dariba Complex and first electric cherry picker at Rampura Agucha. Further, we are entering partnerships with different agencies to continue our ESG drive. We have tied up for a high-density plantations at Chanderiya Lead-Zinc Smelter and also entered an MoU to deploy further 30 electric vehicles for material movement. I'm pleased to share that our ESG reporting suite that is Sustainability Report, Climate Action Report and TNFD report, if is all available on our website. Similarly, our CSR initiatives continue to deliver meaningful impact. As a highlight, I'd like to inform that we added almost 3,000 Nand Ghars across Rajasthan, thereby taking our overall presence of Nand Ghars in the country to 12,263. Looking at the market environment, India's growth outlook remains strong. GDP projections are in the range of 6.4% in 2026 and 6.7% in 2027. As you know, this is well above the global growth rate of projections of 3% and 3.4% respectively. This has part has been possible in part to the government capital expenditure which has risen 2.6 times over last six years. In FY '27 also, the government capital expenditure is budgeted at approximately 4.4% of GDP. Coming to our industry, zinc fundamentals remain strong with 2026 forecasted refined zinc demand is at 13.87 million tonnes whereas the supply outlook is at 13.69 million, that means there is almost a 180 kt deficit in the market. New projects are limited as we hear and mine closures and declining grades will mean that over the next decade we see the markets remaining tight whereas infrastructure growth, urbanization, electrification indicates an annual demand growth in the market. Silver again is expected to remain in deficit for the sixth consecutive year in 2026. A overall shortfall is projected at about 1.44 thousand tons. The industrial demand of silver is increasing. As we look at as you all know, we have been looking at new tech and new tech markets. But now the world is realizing that old age minerals and metals are what will actually make this new tech industry feasible. Coming to the operational performance of the company, mined metal production has risen 5% year-on-year. This is the highest-ever second quarter output. Similarly, our refined metal production has risen 7% year-on-year and I'm happy to report that zinc cost of production is better by 29%
Arun Misra (Hindustan Zinc Ltd): Our zinc cost of production in second quarter FY '27 stands at $703 per tonne. Zinc cost of production, we had guided earlier will be for the year we had guided for a position of $975 to $1,000. However, looking at the current improvements in zinc cost of production, we are revising our COP guidance to $825 to $850 for the full year. Similarly, saleable silver production has risen 20% year-on-year. This stands at 173 tonnes in this quarter. This has contributed approximately 45% of first half profitability, so it remains very important to us. Our industry-leading cost position, strong production and favorable commodity prices have driven a record quarterly financial performance. Our EBITDA stands at 9,285 crores and the net profit is at a record level of 6,412 crores. Going forward, our growth projects remain on track. Engineering and procurement for the 250 ktpa integrated zinc expansion is almost complete and mine development is underway. Similarly, the 10 million tonnes per annum tailing reprocessing plant is also progressing as per plan. Looking ahead, we remain focused on translating this momentum into sustained performance. For this, we will have a very disciplined execution of our expansion projects, further strengthen our cost leadership and we will like to unlock greater value from our resources. Our growth is AI-driven and technology-led. We focus on AI in a big way, not just in implementing use cases of AI, but also making our process AI native. Our strong start to FY '27 reinforces our confidence in the strategy ahead. Backed by our integrated business model and favorable structural demand trends, Hindustan Zinc is well-positioned to accelerate its 2x growth journey. With this, I now hand over to Amit, our CFO, for an update on the financial performance.
Amit Gupta (Hindustan Zinc Ltd): Thank you, Mr. Prakash, and good evening, everyone. The global business environment remains challenging amidst escalating geopolitical tensions, energy and trade disruptions, changing tariff policies and divergent regional growth trends. While these dynamics are likely to drive near-term volatility across inflation, currencies and financial markets, India remains a key growth driver, supported by resilient domestic consumption and sustained investment in infrastructure and manufacturing. In this environment, commodity prices will continue to be influenced by geopolitical developments, energy cost, monetary policies, currency movement and global growth trends. Energy market disruptions have heightened volatility while supply constraints and low inventory have provided support to zinc prices and persistent supply deficit has remained favorable for zinc. Despite near-term uncertainties, the medium-term to long-term outlook for our key metals remains positive. Our integrated business model, competitive cost structure, prudent capital allocation and robust balance sheet position us well to navigate market volatility, pursue strategic growth opportunities and sustain value creation across commodity cycles. Our strong momentum continued in this second quarter, with quarterly EBITDA surpassing 9,000-crore mark for the first time. This was driven by consistent execution, benefits from last-year debottlenecking projects, the commissioning of additional roaster and cost of production. Our precious metal portfolio also continues to contribute meaningfully to our profitability. During the quarter, we delivered revenue from operations of 15,093 crore, up 77% year-on-year. This growth was led by higher metal production
Amit Gupta (Hindustan Zinc Ltd): Since, underground transition. In addition, we monetize 10 KT of lead concentrate during the quarter containing approximately 10 ton of silver and 6,000 ton of lead. Together stronger revenue and margins drove report quarterly net profit of 6,412 crore up 142% year-on-year. This strong performance together with robust quarterly results translated into best ever first half financial performance. Our half-year revenue from operations reached at 28,840 crore, up 77% year-on-year while EBITDA grew 108% to 17,359 crore. Supported by lower zinc cost of production, excluding royalty, $776 per ton. Net profit rose to a record of 11,881 crore, up 143% year-on-year, reaffirming the resilience of our business model and strong cash generation capability. Generating 6,389 crore of free cash flow before growth CapEx during the quarter highlights the strength of our underlying cash flows, cost competitiveness and prudent financial management. This strong cash generation provides the capacity to advance our strategic expansion plan while preserving financial discipline and supporting sustainable long-term value creation. We closed the quarter with net cash balance of 11,268 crore, reinforcing our financial strength and providing ample headroom to capitalize on growth opportunities. Our robust balance sheet and disciplined capital allocation approach enable us to balance investment in future growth with attractive shareholder returns. In first half of the year, we delivered 15% total shareholder return, including Rs. 64 per share in capital appreciation and Rs. 11 dividend. This placed Hindustan Zinc among the top 5 NIFTY Metal companies and top 40 NIFTY 100 companies by market capitalization as September end. Our returns were 12 times the Nifty 50 and 4 times the Nifty 100, reinforcing the commitment to long term value creation. Our contribution to India's economic growth remains an integral part of our value creation philosophy. During the first half of the year, Hindustan Zinc contributed more than 13,000 crore to the national exchequer through taxes, royalties, duties, and other statutory levies, reinforcing our role as a responsible corporate citizen and a meaningful contribution to India's economic development. Looking ahead, we remain focused on strengthening our cost leadership, advancing our capacity expansion plan, and maintaining a strong balance sheet to support consistent cash generation and attractive shareholder returns. With our 2X growth ambition, integrated operating model and favorable long-term demand prospects for zinc and silver, we are well positioned to capitalize on emerging opportunities and deliver sustainable long-term value for our stakeholders. With that, I would like to thank all the shareholders for their continued trust and support. I will now hand it over this call to the operator for Q&A session. Thank you.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead.
Pallav Agarwal (Antique Stock Broking): Yeah, good afternoon, sir, and congratulations on a very good set of numbers. So, the first question was on the hedging. So, if you could just, you know, share what levels of what quantity and hedges that we have and if you could just break it down over the quarters for the rest of the quarters, that would be helpful.
Amit Gupta (Hindustan Zinc Ltd): So, at this point of time, for the quarter three, we have a 40 KT of zinc, which is hedge and 36 KT of zinc for quarter four hedge at a rate of 3,476 for quarter three and 3,698 for quarter four. And we have a 8 ton of silver also which is only in quarter three.
Pallav Agarwal (Antique Stock Broking): And what rate?
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