Ladies and gentlemen, good day and welcome to the Second Quarter FY 2026 Earnings Conference Call of 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. Please note that this conference is being recorded. I now hand the conference over to Ms. Raksha Jain, Director of Investor Relations of Hindustan Zinc. Thank you, and over to you, ma'am.
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 2026. In this call, we will refer to our investor presentation available on our company's website. Please note that today's entire discussion will be covered by the Safe Harbor Clause mentioned on slide two of the presentation. Today, we have our CEO, Mr. Arun Misra, and CFO, Mr. Sandeep Modi. 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.
Thank you, Raksha. A very good evening to all of you. Thank you for joining us today for the Second Quarter and Half-Year FY 2026 results briefing. The year so far has been highly impactful for Hindustan Zinc, with each milestone being the highest-ever mine metal production, lowest cost of production in recent years, ambitious CapEx initiatives, or globally recognized ESG practices, reinforcing the company's strong trajectory for sustainable long-term growth and its global leadership position. This quarter, we had the privilege of becoming the first Indian company to secure the prestigious membership in the International Council on Mining and Metals, a global industry body that brings together leading mining and metals companies and associations to improve sustainable development performance in this sector.
As the first new member of the council since 2021, Hindustan Zinc is now part of the exclusive global league of 26 companies recognized for excellence in responsible mining. With this inclusion, it becomes imperative that we further deepen our commitment to sustainability across all dimensions outlined under the Sustainability Goals 2030. On the safety front, I am happy to share that we have maintained fatality-free operations during the year, reflecting our strong commitment towards high standards of safety culture. Advancing our decarbonization journey, we signed two MOUs with GreenLine Mobility Solutions Limited, the first to deploy 100 EV trucks for concentrated movement, making India's first commercial-scale initiative of its kind, and the second to expand the LNG net truck fleet for finished goods logistics.
This quarter, we also released our FY 2025 Sustainability Reporting suite, including the Sustainability, TNFD, and Climate Action Reports, offering comprehensive and transparent disclosures that underscore our commitment to strong governance and accountability. Our CSR initiatives continue to create meaningful impact, spanning seven thematic areas and positively touching over 2.3 million lives. Last quarter, we signed an MOU with the Rajasthan Heritage Authority to develop the heritage corridor at Poonchhari Ka Lauta, with a CSR commitment of INR 85 crore over three years. The project will preserve and promote local culture and heritage, including restoration of historical sites and buildings, along with developing botanical gardens and supporting infrastructure. This quarter also witnessed the second edition of India's most beautiful, the Vedanta Zinc City Half Marathon, which saw participation from nearly 7,000 runners across the globe, all supporting the noble cause of Run For Zero Hunger.
Coming to the market update, in the broader macroeconomic backdrop, global growth continues to navigate a phase of softness and elevated uncertainties. Leading institutions now forecast global GDP growth in the range of 2.5%-3% for 2025, slightly lower than earlier projections amid mounting trade tensions, volatile commodity cycles, and policy tightening in key economies. Against this subdued demand environment, non-ferrous metal markets have exhibited notable resilience. Zinc prices, for instance, have firmed in recent months, with LME zinc crossing the $3,000 per ton mark in October and continuing to hover above this level, supported by tight inventories and renewed consumption in galvanizing and infrastructure segments. Lead prices have also remained steady, underpinned by robust battery demand and limited upstream supply. Meanwhile, silver has staged a strong rally, touching new highs and reinforcing its dual role as both an industrial metal and a store of value.
On the domestic front, India continues to be a bright spot, maintaining strong growth momentum. GDP expanded by around 7.8% in quarter one FY 2026, with major agencies projecting full-year growth in the range of 6.5%-6.8%. This robust performance is driven by resilient private consumption, sustained capital expenditure, and supporting government policies, collectively providing a constructive demand tailwind for zinc, lead, and silver offtake. This favorable commodity momentum plays directly into Hindustan Zinc's strength as a leading integrated producer of zinc, lead, and silver. The sustained firmness in zinc and lead price continues to support stable profitability in our base metal business, while the ongoing silver rally is providing significant upside, particularly as we advance our long-term plan to scale silver production from current 700 tons to 1,500 tons through our 2x growth CapEx initiatives.
Moving to the operational performance, the company achieved its highest-ever second quarter and first-half mine metal productions, coupled with five-year lowest zinc cost of production for the same periods, thereby driving the highest-ever second quarter EBITDA of INR 4,467 crores and profit after tax of INR 2,649 crores. The zinc cost of production for the quarter stood at $994 per ton, better by 7% year-on-year, driven by renewable energy consumption, higher byproduct realization, and softened input commodity prices. For the half-year, we achieved a COP of $1,002 per ton, better by 8% year-on-year, driven by better metal grades, higher byproduct sales, softened input commodity prices, enhanced domestic coal and renewable energy consumption. During the quarter, the refined metal production stood at 246,000 tons, while sellable silver production was 144 metric tons. Silver surges to an all-time high of about $50 per troy ounce.
As India's only integrated silver producer and with around 40% of profits from silver, we are uniquely positioned to capitalize on this cycle. Looking ahead, we have revised our FY 2026 refined metal guidance to 1,075 ± 10,000 tons per annum and silver guidance to 680 tons ± 10 tons per annum, considering lower plant availability and lower silver input during the first half of the year. Our growth projects are progressing as per plan. During the second quarter, we commissioned a 160,000 tons per annum Roaster at Debari and completed the de-bottlenecking of the cell houses at Dariba Smelting Complex. The de-bottlenecking of Chanderia Lead- Zinc Smelter is on schedule for completion by quarter three FY 2026, followed by Lead Silver Recovery Plant with hot acid leaching technology by quarter four FY 2026. These projects will drive higher refined metal and silver production in the coming years.
Further, accelerating the company's growth in alignment with the nation's prospects, EPC partners have been finalized for the previously announced projects of 250,000 tons per annum integrated metal capacity expansion, which is expected to be completed by second quarter FY 2029, and India's first 10 million ton per annum zinc tailing reprocessing plant, which is expected to be completed by fourth quarter FY 2028. As we look ahead, in a relatively tepid global growth environment, our integrated operations, cost discipline, and commodity leverage positions are well to deliver strong earnings. Going forward, the market should expect continued upside potential, assuming demand holds and inventory stay alive. We see zinc remaining in resilient trading band, lead continuing to be underpinned by battery and industrial demand, and silver potentially sustaining further gains, all of which could drive incremental margin expansion in the coming quarters.
Our priority is to ensure timely execution of our growth projects and strengthening Hindustan Zinc's position as a future sustainability-driven global leader. Our ESG commitment remains straightforward, guided by ICMM principles, and anchored in global practices. Through strategic diversification and disciplined investments, we are poised to deliver sustainable growth and long-term value creation for our shareholders. With this, I now hand over to Sandeep for an update on the financial performance.
Thank you, Mr. Misra, and a very good evening, everyone. As the global growth remains moderate amid policy tightening and geopolitical uncertainty, yet commodity markets have shown resilience. Zinc and lead prices have firmed up on a tighter supply to industrial demand. Silver prices are trading at all-time high levels above $50 per ounce, supported by strong industrial demand from solar, electronics, and the green energy transition. Hindustan Zinc is well positioned to capture this upcycle with our consistent operational excellence and cost leadership position. As the world moves towards a low-carbon future, Hindustan Zinc stands in the right business at the right time, a compelling choice for investors seeking exposure to India's precious metal primary producer company. A sustainability growth story at the time when zinc prices are also at its peak in October till now during this financial year.
India continues to be a bright spot with GDP growth between 6.5%-6.8% envisaged in FY 2026, supported by resilient private consumption, consistent capital expenditure, and strong policy push. This robust domestic momentum is translating into a constructive demand tailwind for zinc, lead, and silver offtake. It is prudent to note that during the first half of the year, we contributed around INR 8,400 crore to the national exchequer, of which INR 2,500 crore was contributed to the state of Rajasthan, reflecting our continued role as a significant economic partner to both the state and the nation. Before I move to the financials, I am pleased to share that we have published our fifth integrated annual report along with the digital annual report for FY 2025, hosted on a green-powered server for the third consecutive year.
This year, our GenAI chatbot has evolved into a Zincky with real-time voice interaction and enhanced accessibility features, including text-to-speech, and can be accessed on our website. Coming to the numbers, we delivered highest-ever second quarter revenue from operations at INR 8,549 crore, up 10% sequentially, driven by higher commodity prices, stronger dollar, and higher byproduct realization, partly offset by lower production. During the quarter, we achieved our highest-ever second quarter EBITDA of INR 4,467 crore, up 16% sequentially. This performance was underpinned by our five-year lowest second quarter zinc cost of production, excluding royalty of $994 per ton, enabled by higher byproduct realization and softened input commodity prices. These factors contributed to sustaining our industry-leading EBITDA margin of around 52%. As a result, we recorded profit after tax of INR 2,649 crore, up 19% quarter-to-quarter, reflecting the strength of our operations and favorable market conditions.
In the first half of the year, we achieved our second-best financial performance with EBITDA at INR 8,328 crore, up 3% YoY, and PAT of INR 4,883 crore, reflecting an increase of 5% over last year. Our zinc COP, excluding royalty, stood at an excellent $1,002 per ton, the lowest first-half cost in the last five years. Also, we achieved record return on capital employed of around 65% for the trailing 12 months. Since the first quarter, we have consistently delivered zinc CoP below our initial guidance. In line with this, we are revising our full-year cost guidance down to around $1,000 per ton, well ahead of our earlier FY 2027 target. In line with more approved growth projects, our growth capex guidance for the year would be in the range of $350 million-$400 million.
This encompasses all ongoing growth initiatives, including fertilizer, hot acid leaching plant, smelter de-bottlenecking, as well as the new 250 KTPA integrated smelter expansion at Debari in India's first zinc tailing reprocessing plant at Rampura Agucha. Further, I am pleased to share that Hindustan Zinc has been included in the Nifty 100 and Nifty Next 50 indices effective 30 September 2025. This milestone reflects our journey of growth, resilience, and consistent performance and underscores our commitment to creating long-term value for all our stakeholders and for the nation. In summary, the quarter reflects continued resilience and operational excellence driven by cost leadership and disciplined execution. As we enter the next growth phase, our focus remains on maximizing metal recovery, expanding silver output, and delivering high-return projects, while leveraging technology, innovation, and sustainability to drive value.
With India's strong economic momentum and green transition, Hindustan Zinc is well positioned to create sustainable value and drive responsible growth. With this, I now hand over to the operator for Q&A. Thank you.
Thank you very much, sir. Ladies and gentlemen, we will now begin with a question and answer session. Anyone who wishes to ask questions may press star and one on the touch-tone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Persons are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. You may please press star and one to ask questions. The first question is from the line of Amit Lahoti from Emkay Global. Please go ahead.
Thanks for the opportunity. My questions are on silver. So the first one is, are we running the plant on lead mode or zinc- lead mode? Given pricing economics favors lead mode.
No, no. We are running the plant still on zinc lead mode because what we are doing is we are slightly tweaking the strategy from the earlier strategy of for silver we run only on lead mode. What we are doing, we are running on zinc plus lead mode, but we are consuming most of the concentrate which is coming from SK Mine, which is rich in silver. This also has to be seen along with the grade of silver which the mine is producing. Current grade of silver is not very high. It's around 90 ppm. So we would not be getting that much benefit with lead mode as we were getting earlier. So it is prudent to run in zinc plus lead mode while maximizing use of SK Mine concentrate so that we at least produce all the silver that we can in the current circumstances.
Okay. And then based on our 680 tons of guidance for silver, the asking rate for the second half is high given that first half production has been a little slow. So how are we looking to achieve this number? And then do we have visibility of producing, say, 800 tons capacity in a year or two?
Yeah, yeah. So what we have done in H2, we have diverted resources from other mines to SK Mine, and also we have incentivized the contractors and workmen who are working there to ensure that we attack those stocks with high silver quantity and produce them in H2 so that we get the maximum advantage of silver till the time the prices are high. So that would be the change you will see in the numbers as we keep on delivering. H2 will produce the numbers so that we can reach the guidance that we are very confident of that we have released today.
Okay. Then can we reach 800 tons in, say, FY 2027? Is that a target?
That's the target because by that time we will have this current Fumer fully stabilized. We will have that with the acid leaching from jarosite to recover some amount of silver. We will also have the new 250 KTPA plant coming in from there. Also, it will be built along with Fumer. So it may not be 800 ton, but surely from 700 ton on an average to 750 ton looks possible.
Okay. Thank you.
Thank you. The next question is from the line of Manav Gogia from YES Securities Limited. Please go ahead.
Yes. Hi. A very good evening, and thank you for the opportunity. First of all, congratulations on the good set of numbers. So my first question comes around the 250 KTPA project, which is costing about INR 12,000 crores. And now we have a tailings project of INR 3.8 crores coming up. So how do we see the CapEx shaping up for the next couple of fiscal years, early 2027 and 2028?
So, I'll just correct you a little, that 250 KTPA smelter cost is now INR 12,000 crores. It is a smelter expansion of mine, new concentrator plant altogether. That part of the project is INR 12,000 crores. As far as what was your second question, that 250 KTPA smelter, we have already started work on the ground, and we are finalizing the technology that this smelter, the cell houses, will be 240 kiloamps cell house compared to the earlier cell houses, which were 200 kiloamps, and we are also looking to begin the inherent ability to de-bottleneck and increase the capacity further with a marginal CapEx investment. Once we stabilize that 250 KTPA production, we will be able to de-bottleneck further.
And Manav, it's a bit here. I think you also wanted to know how the capital allocation or CapEx will be there in the next three to four years. So also outside this INR 16,000 crore, will be around 20% will be this year or around 50% will be next year, and then remaining will be next to next year. So normally the CapEx goes in those manners. Initially, you pay the advances and mobilization advances, so 20%-25% this year and 55%-60% next year, and then remaining in the FY 2028.
Thank you. For FY 2026, we have $350 million-400 million growth CapEx. What would be the total inclusive of the maintenance CapEx for this particular year?
No, this is the growth CapEx. Maintenance CapEx will be around $400 million.
Okay. Got it. Sure, sir. So my second question, in a moment, comes back to the tailings project. I just wanted to know what sort of refined metal output are we looking at from this 10 million tons of the tailings project that we are setting up?
From the 10 million tons project, from the tailings project that we're looking at, about 100 KTPA zinc metal should be produced.
Okay. It's going to be purely zinc coming out of this?
Zinc and permit some proportionate but very low quantity of lead also.
Around 25 tons of zinc are containing in the concentrate.
Sure, sure. Thank you, sir. So just one final question I had. Could you please provide me what was the average mining grade for this particular quarter?
7.4%.
7.4%. So earlier was 7.53% in Q1, right?
But 7.53% this time also. Our expectation was 7%, but we could finish at 7.4%.
You should also look at YoY. Last year's quarter was 7.3%.
Got it, got it. Sure. I'll get back into the queue. Thank you so much.
Thank you.
Thank you. The next question is from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead.
Yeah, good evening, sir. So I just want to get a sense of what is the proportion of renewable energy in this quarter and what can it be at the end of FY 2026?
19% was the renewable energy during this quarter, and the exit, as we said earlier, should be 25%.
Sir, and this would be one of the factors for our cost CoP staying down?
So as we said earlier, every 2% of the renewable energy increase reduces my power cost by 1% to total cost by $1.5 per ton. So that is one of the key factors. Apart from the overall coal cost also softening, that is also helping us in the overall power cost.
Sure, sir. And any reason why our depreciation declines sequentially? Because mined metal production is broadly similar. So we've seen a decrease on a sequential basis in depreciation.
Yes. Initially, it decreased on the amortization. I have a 2% depreciation and amortization. So we have basically the lower so it is a function of the mine development per meter rate because we have put the instant cost effect. Accordingly, our mine development rate per meter was put down. So accordingly, amortization cost has put up.
Sir, I'm sorry to interrupt you. Your voice is breaking right now.
Am I audible?
Sir, please repeat your last line. We couldn't hear that clearly.
So depreciation and amortization, Pallav, consists of two items, depreciation and amortization. While depreciation has been increased with the Roaster and the de-bottlenecking CapEx getting capitalized, there was a benefit in terms of a reduction in amortization expenditure given that it is a function of the mine development rate per meter. So that was truly in line with that amortization expenditure has been lower.
Sure, sir. Also, just on the net debt, so we've seen a decline on a sequential basis. So are we still expecting that we could probably end up with a net cash position by the end of FY 2026?
We should be at net debt. It should be flat given that we have revised our growth CapEx guidance from $350 million to $400 million. As we said earlier, pre-growth CapEx should be our number $1.1 billion-$1.2 billion. With the growth CapEx investment and overall sustaining, we should be generating the numbers. On that basis, we should be net debt or net cash flat.
Sure, sir. So lastly, I mean, so now I think we are coming back to below $1,000 of CoP. So one, obviously, is the increasing proportion of renewable power. So that's reducing the power and fuel cost. And also, I think maybe in the second half, maybe our grades also should improve. So would that also contribute to the CoP coming down?
Yeah, yeah, so we should be expecting CoP around 950-975 in the Q4 exit.
Okay. Okay, sir. Thank you so much.
Thank you.
Thank you. The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah. Thank you for the chance. It's a first question. On our hedging policy, in the past, we've occasionally hedged and sold forward some volumes. So as of today, what is our position given the spike in zinc and silver prices? Are we looking at hedging some volumes? And principally, if you can reiterate, what is our strategy?
So, to be clear, currently, we are hedged or open position of hedging of zinc at 87 KTPA at an average price of $2,872. That is the hedged position as of date. And silver, we are hedged by 131 tons with an average price of $37 per tranche. So the strategy remains that if there is a spike in the prices and we see it's better than our internal business plan, accordingly, some portion we can hedge. So it gives the balancing of the margin on the hedged position, which is 10%-20%. On the remaining 80%, it remains open exposure. So that is something we are thinking to put the strategy in place.
Third, it's for second half FY 2026?
FY26, second half, that's what I was saying. Open quantity is 131 tons of the silver and 87 KTPA of the zinc.
That is the hedged quantity, right, not the open quantity?
That's the open quantity. That's what I'm saying.
Okay.
Second half, we're up. Open means hedged quantity remaining will be open.
Remaining to be open.
If you reduce whatever we will produce and - 131, it will remain open.
That's right. Understood. Understood, sir. So second question is on the volumes. Now, practically, our capacity is around 1.18 or 1.28. When can we achieve these volumes? Given all our projects are now in place, can we hit this sometime in FY 2027 next year, which implies a high or early double-digit kind of a growth in volumes?
We will have the growth of 1.1 million tons plus next year, surely. Because, see, the way we had put up the reason for which we had put up the new Roaster was to create that availability of calcine and allow other Roasters to go down whenever required so that there was never a shortage of calcine. But that delay in commissioning of R6 has impacted availability of calcine in H1, and that is showing in the result. However, in H2, from the calcine side we are projected.
Now, we have also de-bottlenecked our Dariba cell house by increasing the current capacity from 200 kiloamps to 210 kiloamps. And we will be doing the same thing in Chanderia in this month. So together, it will give us additional 25 KTPA of production over the earlier base of 1040 or 1080 KT. So altogether, next year, we are absolutely positioned correctly to achieve more than 1.1 million tons metal. We could have achieved this year also had the Roaster 6 commissioning not got delayed.
Understood, sir. Understood. And just one last question. Any of our earlier planned strategic action like acquisition of Zinc International or split of business into zinc, lead, silver, anything of that on the cards now or in near to medium term?
No. Acquisition of Zinc International is purely out of the question because that is directly trying to expand, and they will become one million tons player by themselves, and we are also trying to grow from one million tons to two million tons, so right now, we have no more capacity to absorb any further zinc capacity from any other part of the world, so that's number one, and number two, on the demerger, we still believe that's the right process, and we will take it up wherever it is required because, as you can understand today, with such raging silver prices, if we were demerged into zinc, lead, and silver company, net valuation would have been far better than what it is now.
Understood, sir. Thank you and all the best.
Thank you.
Thank you. The next question is from the line of Raashi Chopra from Citigroup. Please go ahead.
Thank you. I just wanted a clarification on some of your answers. On the CapEx side, you mentioned that the CapEx breakdown for the two projects, that one is INR 12,000 crores and the other is INR 3,800 crores. That will be a 20% this year, 50% next year, and then the balance following. Is my understanding correct?
Yeah, broadly correct.
So for FY 2026, you've indicated that growth CapEx is $350 million-$400 million. That includes this 20% that we're talking about, right?
Yes.
Okay. And maintenance CapEx, you said $400 million?
Yes.
All right, then on the hedged position 131 of silver, what is the? I missed the price it said that, and 87 KTPA of zinc, what are the prices? Open with.
Zinc hedged at $2,872 per ton and silver at $37 per tranche.
Okay. And renewable proportion this quarter, sorry, was how much?
19%.
So same as the first quarter?
Yeah. So it will be increasing with the wind capacity getting added during this quarter.
And the 70% target that you've given in the presentation, that is for when?
FY 2028. FY 2028, we will have 70%.
And just last question for me, how much domestic coal? What was the proportion of domestic coal in this quarter?
58% was this quarter. And last overall H1, it was around 52%.
Got it. Thank you.
Thank you. The next question is from the line of Pavan Kaware from Nayan M. Vala Securities. Please go ahead.
Hi. Good afternoon, sir. So my question was on the outlook for going forward for 2027 and 2028 on metal production and zinc metal. Do we have guidance on that?
Sorry, we could not hear you.
Mr. Kaware, I'm sorry to interrupt you, sir. Mr. Kaware, there is a lot of background noise from your end. Can you please move to a quieter place and ask the question?
Hello. I'm audible?
You're audible. There is a lot of background noise which is coming along with your voice, and we are not able to understand what you're trying to ask.
Is it clear now? Hello?
Yes. Please proceed.
So my question was on the outlook for 2027 and 2028. Do we have calculated on the refined metal productions?
No, no. You're talking about FY 2027, 2028. That outlook we cannot give now. We do business plan, then we'll release the guidance for next year. That time, you will come to know.
Any ballpark numbers in terms of manufacturing?
No, no, no. As we said, all that I can say, that this year we tried to produce 1.1 million tons. Had the Roaster commission not got delayed, we would have surely achieved. Now, that means now the Roaster is commissioned, so next year these numbers should be achievable. But what will be our guidance next year, we'll be able to tell only next year.
Okay. And in terms of the debottlenecking of silver, is there any increase in the refined metal capacity?
It's about 25,000 tons of metal production capacity.
On annual basis?
Annual.
Annual basis including zinc and lead.
It's only zinc. Debari is in zinc.
Thank you. That's it from my side.
Thank you. A reminder to all the participants that you may please press star and one to ask questions. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Ms. Jain for closing comments. Thank you and over to you, ma'am.
Thank you, Operator, and thank you, everyone, for joining us today. In line with our commitment to the highest standards of transparency and disclosure, complete reporting tools are available on our website. We would greatly appreciate any feedback or suggestions you may have to further enhance our reporting. Should you have any follow-up questions or require additional information, please feel free to reach out to the Investor Relations team. Thank you.
Thank you. Thank you, members of the management. On behalf of Hindustan Zinc, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.