Ladies and gentlemen, good day and welcome to the second quarter FY 2027 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 touchtone phone. I now hand the conference over to Ms. Raksha Jain, Director of Investor Relations of Hindustan Zinc. Thank you, and over to you.
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 2027. 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's call is joined by our CEO, Mr. Amarendu Prakash, 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. Amarendu Prakash 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. 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 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 operation. 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 quarters to come.
In one of our subsidiaries, HZAPL, Hindustan Zinc Alloys Private Limited, I am happy to report that the subsidiary is using 100% renewable power now. We also introduced our first electric crane 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 high density plantations at Chanderiya Lead Zinc Smelter, and also entered an MOU to deploy a further 30 electric vehicles for material movement. I am pleased to share that our ESG reporting suite, that is sustainability report, climate action report, and TNFD report, is all available on our website. Similarly, our CSR initiatives continue to deliver meaningful impact. As a highlight, I would 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 we know, this is well above the global growth rate projections of 3% and 3.4% respectively. This has been possible in part through the government capital expenditure, which has risen 2.6 x over last six years. In FY 2027 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 tons, whereas the supply outlook is at 13.69 million tons. 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. Overall shortfall is projected at about 1.44 thousand tons. The industrial demand of Silver is increasing. 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. Mine 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 am happy to report that Zinc cost of production is better by 29%. Our Zinc cost of production in second quarter FY 2027 stands at $703 per ton.
Zinc cost of production we had guided earlier. For the year, we had guided for a projection of $975-$1,000. However, looking at the current improvements in Zinc cost of production, we are revising our COP guidance to $825-$850 for the full year. Similarly, saleable Silver production has risen 20% year-on-year. This stands at 173 tons 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 INR 9,285 crore, and the net profit is at a record level of INR 6,412 crore. Going forward, our growth projects remain on track. Engineering and procurement for the 250 KT per annum integrated Zinc expansion is almost complete, and mine development is underway.
Similarly, the 10 million tons per annum tailings 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 2027 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 towards those journeys. With this, I now hand over to Amit, our CFO, for an update on the financial performance.
Thank you, Mr. Prakash, and good evening, everyone. The global business environment remains challenging amid escalating geopolitical tension, energy and trade disruptions, changing tariff policy, and divergent regional growth trends. While these dynamics are likely to drive near-term volatility across inflation, currency, 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 costs, monetary policy, 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 are 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 INR 9,000 crore for the first time. This was driven by consistent execution, benefit from last year debottlenecking projects, the commissioning of additional roasters, 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 INR 15,093 crore, up 77% year-on-year. This growth was led by higher metal production and supportive commodity prices, with better by-product realization, lead concentrate sales, and a stronger dollar providing additional upside.
The combination of strong revenue growth and operating leverage translated into highest ever quarterly EBITDA of INR 9,285 crore, up 108% year-on-year with an industry-leading margin of 62%. Profitability was further strengthened by quarterly Zinc cost of production at $703 per ton, excluding royalty since underground commission. In addition, we monetized 10 KT of lead concentrate during the quarter, containing approximately 10 tons of Silver and 6,000 tons of Lead. Together, stronger revenue and margins drove record quarterly net profit of INR 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 INR 28,840 crore, up 77% year-on-year, while EBITDA grew 108% to INR 17,359 crore. Supported by lower Zinc cost of production, excluding royalty $ 776 per ton.
Net profit rose to a record of INR 11,881 crore, up 143% year-on-year, reaffirming the resilience of our business model and strong cash generation capability. Generating INR 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 a capacity to advance our strategic expansion plan while preserving financial discipline and supporting sustainable long-term value creation. We closed the quarter with a net cash balance of INR 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 the first half of the year, we delivered 15% total shareholder return, including INR 64 per share in capital appreciation and INR 11 dividend.
This places Hindustan Zinc among the top five Nifty Metal companies and top 40 Nifty 500 companies by market capitalization at September. Our returns were 12 x the Nifty 50 and 4x 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 INR 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 over this call to the operator for Q&A session. Thank you.
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 will take a first question from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead.
Yeah. Good afternoon, sir, and congratulations on a very good set of numbers. The first question was on the hedging. If you would just share what levels of quantity and hedges that we have, and just break it down over the quarters for the rest of the quarters, that would be helpful.
At this point of time, for the quarter three, we have 40 KT of Zinc, which is hedged, and 36 KT of Zinc for quarter four hedged at a rate of INR 3,476 for quarter three and INR 3,698 for quarter four. We have 8 tons of Silver also, which is only in quarter three.
What is—
At a rate of $68 per ounce.
—okay.
Sorry.
Yeah. Thank you for that. Just on the second question was on the cost. We are significantly below what we started with on the cost guidance of $975-$1,000 per ton. How have sulfuric acid prices, have they remained strong? Can there be a positive surprise to a revised guidance of $825-$850 going ahead?
Yeah. You are right. From the cost point of view, we have a positive surprise on the byproduct realization, which is sulfuric. There are cost escalations also because of the geopolitical issues. That is impacting us almost by $50. In totality, we are delivering the cost. For quarter two, we are believing that we will be broadly in the same range, delivering the overall cost estimate for the year at $825-$850.
Sure, sir. Yeah. Thank you. That's it from me.
Thank you. Next question is from the line of Kartikeya Pandey from 360 ONE Capital. Please go ahead.
Yes. Hi, sir. Thanks for the opportunity, and congratulations on a great set of numbers. Yeah, am I audible properly?
Yes. Please go ahead.
Hello. Yeah. I had just two questions. One is that, sir, how much of your domestic coal usage in percentage for the second quarter?
It is at 32%.
Okay. On CapEx front, how much was the CapEx in Q2, and out of that, how much was sustenance CapEx and how much was growth CapEx at this cycle?
During the quarter, we have spent around INR 1,200 crore on sustaining CapEx and around INR 700 crore on the growth CapEx.
Okay. And sir, what is the whole year outlook on this? How much will be the sustenance and growth CapEx?
Whole year outlook, we are on the same line the way we have guided. The whole year outlook is in the range of INR 5,000 crore only, and with the expansion which we are expecting in quarter three and four. We will be able to spend more during those quarters, we believe.
Okay, sir. Thank you, sir. I will join in. Thank you.
Thank you. We will take our next question from the line of Anuj Khandelwal from JM Financial. Please go ahead.
Good afternoon, sir. Congratulations on a really good set of numbers. My question is, do we have any update on the new critical mineral blocks that we have? Hello, am I audible?
Yes. Can you hear us?
Yeah.
The four critical blocks that we have are exploration blocks. Basically, three out of those four are exploration blocks. We have a guidance of, we will be finishing our exploration program in the third quarter of FY 2029. That will be the time when we will know the exact ore body position and resources available there. Once we conclude this, then we can come back with the production plan and all our business. The Gundlupet REE Block and Yttrium Block. It is a mining lease, and we have executed that mining lease, and then we will be going ahead. It will give us some indication of the resources and the business plan in two to three years.
Okay. Thank you, sir. Can you also tell me how much was the ore grade in the second quarter?
Around 7.6% ore grade.
Okay. Thank you so much, sir.
Thank you. We will take our next question from the line of Shweta Dikshit from Systematix. Please go ahead.
Hi, good afternoon. Thank you. Sir, we sold lead concentrates in the second quarter as well. Could you indicate what was the revenue and margins like for concentrate sale in this quarter? What is your plan for the rest of the year?
During this quarter, we have sold 10 KT of concentrate, which consists of 10 tons of Silver and 6,000 tons of Lead. Overall revenue generated is INR 300 crore, and out of this, profits created out of INR 155 crore. In terms of plans, we do not have as such any plan for the concentrate. We take a call based on the business decision, whether we have a more concentrate in place as compared to our metal capacity, then only we take this call.
Understood. Lastly, any change or update on the silver production guidance for FY 2027 since we have done 321 tons in the first half?
Yeah. We are confident we will be able to deliver our guidance of 680 tons. If you see in the H1, we have sold 20 KT of concentrate, which includes 20 tons of Silver as well. Put together, we have done 340 tons, you can assume in H1. H2, we are confident we will be able to deliver as per the guidance.
For FY 2028, are we at 730 tons, 750 tons kind of a number?
We hope to do that. We have some of the debottlenecking projects in the pipeline. We will be finalizing the numbers towards the end of it.
Okay. Thank you, sir. That is it from my side.
Thank you. Next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah, good evening. Thanks for the chance. Sir, first question, is it possible to share the COP number without the sulfuric acid credits, just to get a better sense on what is happening on overall other cost? Also, if you could share sulfuric acid revenue contribution, which we account for, say, maybe in 2Q or 1H FY 2027?
Sulfuric is a by-product, and if you see in this business, we have multiple by-products. Although sulfuric prices are high, that is why we can say that we have a significant benefit in our COP of sulfuric acid, but we are giving a COP number as an overall number. We are not anticipating any guidance on the sulfuric acid because it is absolutely dependent upon the market, and we sell everything on auction base.
Okay. Is it possible to share last year, what was the contribution? Was it around INR 1,500- odd crore in revenue?
Around INR 1,000- INR 1,200, we can say.
Okay. Whatever is the first half trend date this year, is it higher? Maybe how much higher versus last year? Any color on that, sir?
I am saying we are not giving any guidance or any number on the sulfuric acid because it is a by-product for us, and we sell it in an auction price. Whatever is the market price, we get it during that period. There is no such guidance on sulfuric.
Understood. All right. That is the only question I had. Thanks, and all the best.
Thank you. We will take our last question from the line of [Ram] from JP Morgan. Please go ahead. Sorry, we have lost his connection. As there are no further questions, I now hand the conference over to Ms. Jain for closing comments. Over to you.
Thank you, operator. Thank you all for joining today's call. Should you have any further questions or require additional information, please feel free to reach out to the Investor Relations team. Thank you, and have a great day.
Thank you. On behalf of Hindustan Zinc, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.