Hindustan Zinc stock hits 20% upper circuit to touch new record high; up 133% in CY24 so far – here’s why

Shares of Hindustan Zinc were locked in the 20% upper circuit limit in today's intraday session, reaching an all-time high of ₹743.60 apiece. This impressive rally has pushed the stock's gains to 133% for the year so far.

This rally marks the stock's biggest annual gain since 2009, when it delivered a remarkable 257% return. If the stock maintains its current momentum for the rest of 2024, it could surpass its 2009 performance record.

The company's market capitalisation crossed the ₹3 lakh crore mark for the first time in today's trade, reaching ₹3.13 lakh crore. Notably, market capitalisation has increased by over ₹1.79 lakh crore (57% addition) in CY24 alone.

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The spectacular rally in Hindustan Zinc shares was largely attributed to a substantial surge in base metal prices, following China’s announcement of significant, bold measures to revitalise its struggling property sector. 

Additionally, investor optimism surged after industrial output in the world's second-largest economy jumped in April, beating analysts' estimates. The country's export data also showed strong growth in April, hitting a 3-month high, further boosting sentiment that the demand recovery is gaining globally. 

Amid this backdrop, prices of zinc, lead, aluminum, and copper have risen sharply in recent sessions, continuing the bull momentum that began in mid-February. Copper reached a record high of $11,104.50 per tonne on Monday, while LME zinc, aluminum, lead, and tin also saw significant gains.

Similarly, spot silver prices hit an 11-year high in the previous trading session, reaching $32.15 per ounce. Silver prices have increased by more than 25% year-to-date, driven by robust investment and industrial demand.

Domestically, silver prices rose to an all-time high of ₹95,480 per kilo on MCX during Friday's session. In May alone, prices have jumped 16.61%.

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The solar panel manufacturing industry is significantly boosting silver consumption. Additionally, investments in silver, both in physical form and through exchange-traded funds (ETFs), continue to rise, reflecting growing confidence in the metal's investment potential.

This strong increase in metal prices is expected to improve company margins, as the relatively stable production costs juxtaposed with increased selling prices result in higher profits per unit sold.

Hindustan Zinc, a subsidiary of the Vedanta Group, specialises in the exploration, mining, and smelting of zinc, lead, and other non-ferrous metals. The company’s products include zinc ore, lead zinc concentrate, zinc metal, lead metal, cadmium metal, silver metal, and sulfuric acid.

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The company is ranked as the world’s second-largest integrated zinc producer and the fifth-largest silver producer. With its headquarters located in Zinc City, Udaipur, the company governs about 80% of India's expanding zinc market, its website showed.

In the March quarter (Q4FY24), the company posted its sixth consecutive quarter of declining profit due to lower zinc prices. Despite this, analysts maintain a positive outlook on the company, anticipating a turnaround in Q1 FY25 driven by a robust rally in zinc and silver prices during Q4FY24.

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Disclaimer: We advise investors to check with certified experts before taking any investment decisions.