Shares of Hindustan Zinc will be in focus heading into trade on Monday, December 22, after silver prices extended their remarkable run in 2025, clinching a fresh record high of $68 per troy ounce. A slew of triggers such as low supply, rising demand, and an easing monetary policy cycle by central banks have been behind the surge this year.

Hindustan Zinc ranks among the top five global silver producers with capacity of about 800 tonnes, with silver contributing to 38% to its EBIT.

Earlier this month, international brokerage firm Jefferies initiated coverage with a Buy call and a target price of Rs 660 per share, an upside of 12% from current market levels. To be sure, the stock has already risen 30% in the last 1 month.

Hindustan Zinc stands out as a key beneficiary of rising silver and zinc prices, supported by its first-decile zinc mining costs. While volume growth is expected to remain modest, earnings are projected to expand sharply, with EPS growth of 22% in FY26 and 29% in FY27, followed by a further 7% increase in FY28, Jefferies said in a note dated December 14.

Strong cash generation and healthy return on equity underpin this outlook, with FY26–28 EPS estimates 9–31% higher than Street expectations. Although the stock trades at 9.2x FY27E EV/EBITDA—above its long-term average of 7.3x—the valuation is seen as justified given the rising contribution of silver to overall profitability.

Silver prices have surged in 2025, doubling to about $68 at spot, and Hindustan Zinc expects the global silver market to remain in deficit through the year. The company assumes silver prices in the $56–60 range during 2HFY26–FY28, around 3–10% below current spot levels. With nearly 37% of its 2HFY26 silver volumes hedged at $37, the bulk of the upside from higher prices is likely to flow through to earnings in FY27, delivering a meaningful boost to EBITDA.

Hindustan Zinc has seen a sharp improvement in cost efficiency, with reported zinc cost of production (excluding royalty) declining from a peak of $1,257 in FY23 to $1,002 in 1HFY26. The reduction has been driven by better ore grades, higher use of domestic coal, softer global coal prices and a rising contribution from renewable energy, Jefferies said. Looking ahead, the company expects costs to remain largely range-bound through FY26–28E, as efficiency gains and increased renewable power usage are likely to offset pressures from deeper mining and variability in ore grades.On a YTD basis, shares of the Vedanta subsidiary are up 32%.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. They do not represent the views of the Economic Times)