Why Hindustan Zinc Share Price is Rising

The BSE metal index has been on a tear, surging an impressive 74% in the past year, with a 42% gain clocked in just the last six months.

This positive momentum is being driven by strong demand from key sectors like construction and renewable energy.

This is how the BSE Metal Index performed in the last year.

Speaking of metal sector, one of the major players in this booming industry, Hindustan Zinc, is outperforming the metal index.

Its share price skyrocketed 140% in the past year, with a huge 133% gain so far in 2024.

The rally is propelling Hindustan Zinc share price towards new highs as it touched a 52-week high of Rs 807 today. In the past 5 days itself the share price surged 28%.

Let's explore the factors driving the metal sector's growth and delve deeper into why Hindustan Zinc is a key player to watch.

#1 Global Demand Boom

A surge in global metal demand is gripping the market. This rise is fueled by a potent combination of factors.

First, manufacturing activity in both China and the US, the world's two biggest economies, is experiencing a welcome resurgence after recent contractions.

The US manufacturing activity expanded in March 2024 for the first time after contracting for 16 months.

Similarly, China's manufacturing activity expanded for the first time in six months in March, signaling a recovery despite ongoing challenges in the property sector.

This renewed industrial vigor is driving up demand for metals across the board.

Second, China's government is implementing stimulus measures aimed at reviving its struggling real estate sector - a major consumer of metals.

These measures include relaxed mortgage rules and initiatives promoting affordable housing, which should bolster demand further.

Third, optimism surrounding potential US Federal Reserve rate cuts further fueled the metal demand surge. Anticipation of these cuts has buoyed hopes for economic growth, which translates to higher metal demand.

Finally, disruptions in the global metal supply chain are adding another layer of complexity.

The US and UK's ban on Russian base metals, coupled with similar restrictions on new Russian copper, aluminum, and nickel trading by the LME and CME, has created concerns.

This presents an opportunity for Indian metal companies like Hindustan Zinc to step in and fill the supply gap.

The confluence of these factors is expected to propel global metal demand, creating a fertile environment for Indian metal companies like Hindustan Zinc to capitalise on this upsurge.

#2 Promise of Improving Profit Margins

Amid this backdrop, prices of precious metals like gold and silver have also rallied. Hindustan Zinc is the only listed silver player which brings it a unique advantage.

Apart from this, prices of other industrial metal like copper have also surged to record highs lately, fuelled by concerns about potential supply disruptions and a positive long-term demand outlook.

This upswing, coupled with the company's focus on cost reduction, is expected to significantly improve Hindustan Zinc's profit margins in the near future.

It's important to note that Q4 FY24 marked the sixth consecutive quarter of declining profits for the company, primarily due to lower zinc prices.

Despite this short-term dip, market sentiment remains positive on Hindustan Zinc's long-term prospects. This optimism is driven by the robust rally in zinc and silver prices witnessed in Q4 FY24, which is widely anticipated to translate into a turnaround in profitability for Q1 FY25.

Hindustan Zinc's strong position within the booming metals sector, combined with their ongoing cost-reduction efforts, positions them to capitalise on the current market conditions.

How Hindustan Zinc Share Price has Performed Recently

In the past five days, Hindustan Zinc share price has rallied more than 28%. In 2024 so far, it is up 133%.

The stock surged more than 148% in the past six months and more than 140% in the last year.

The stock touched its 52-week high of Rs 807 on 22 May 2024 and a 52-week low of Rs 285 on 15 March 2023.

About Hindustan Zinc

Incorporated in 1966, Hindustan Zinc has a rich experience of more than five decades in zinc-lead mining and smelting.

The company is one of the lowest cost producers of zinc globally and is India's only Integrated producer of zinc, lead, and silver.

It is a subsidiary of Vedanta Limited which owns 64.9% stake in it. 29.5% stake is owned by government of India.

To know more about the company, check out Hindustan Zinc company fact sheet and Hindustan Zinc's quarterly results.

You can also compare Hindustan Zinc with its peers on our website.

Hindustan Zinc vs Vedanta

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