Hindustan Zinc reports record EBITDA but zinc cost figure contradicts itself
Q1 zinc cost of production appears as both $1,851 and $851 per ton in same call; fertilizer commissioning delayed by at least a quarter.
What's new
- Q1 revenue ₹13,747 cr, up 77% YoY; EBITDA ₹8,074 cr, up 109% YoY at 59% margin.
- Record mined metal output of 268,000 tons, fifth consecutive Q1 record.
- Zinc cost of production excluding royalty fell 16% YoY, but figure conflicting ($1,851 vs $851).
- Fertilizer plant delayed from Q2 FY27 to Q1 FY28 due to pending regulatory approvals.
Themes from the call
Demand
Zinc, lead and silver prices supported by infrastructure demand and energy transition, though geopolitical volatility persists.
Margins
EBITDA margin of 59% driven by record volumes, cost decline, by-product realization and a one-off concentrate sale of ₹350 cr.
Capital allocation
Net cash of ₹5,572 cr; FY27 growth capex guided at $500-600 mn; first interim dividend of ₹11 per share paid.
Guidance watch
- FY27 refined metal production guidance: 1.1 mn tons; silver: 680 tons.
- FY27 zinc cost (ex-royalty) guided at $975-$1,000 per ton.
- Fertilizer plant commissioning delayed to Q1 FY28; phosphoric acid in Q2.
- Conceptual 650 KT capacity capex estimated at ₹24,000-25,000 cr; board approval expected Q3 FY27.
Risk flags
- Internal inconsistency on reported zinc cost figure ($1,851 vs $851) raises credibility concerns.
- Fertilizer project delay extends timeline and depends on regulatory approvals.
- Power costs rose sequentially as domestic coal linkage fell to 36% from 64%.
- Leadership transition: new CEO Amarendra Prakash takes over from August 1, 2026.
Key quotes
-
"We achieved the lowest quarterly zinc cost of production, excluding royalty, since our underground transition at $1,851 per ton."
— Prepared remarks, Jul 2026 -
"We achieved the lowest ever quarterly zinc cost of production, excluding royalty, since our underground transition at $851 per ton."
— Amit Gupta, CFO, Jul 2026 Q&A
The brief
Hindustan Zinc delivered a record quarter by most operational and financial metrics. Revenue jumped 77% to ₹13,747 crore, EBITDA more than doubled to ₹8,074 crore at a 59% margin, mined metal output hit a new first-quarter high of 268,000 tonnes, and the balance sheet sits on net cash of ₹5,572 crore. That strength finances an ambitious growth capex of $500-600 million this year and an interim dividend. Yet the call was marred by an internal contradiction that will trouble analysts: the zinc cost of production was reported as both $1,851 per tonne in the prepared remarks and $851 per tonne in the CFO's subsequent comments. Management did not reconcile the $1,000 gap. The fertilizer project, once on track for early Q2 FY27 commissioning, is now only partially ready in Q2, with the main plant pushed to Q1 FY28 because of pending environmental clearances. For a company that prides itself on cost leadership and reliable delivery, two unexplained discrepancies on one call are two too many. The record numbers are real, but the cost number that matters most is now in question.
Record EBITDA masks a $1,000 cost gap and a broken fertilizer timeline. Credibility on numbers needs repair.