Hindustan Zinc (HINDZINC)

FairStock Score: 71/100 — STEADY

Score breakdown: P/E: 1/3 · ROCE: 2/2 · Growth: 2/2 · Dividend: 1/1

Key Financials

Strengths

• ROE of 86.16% and ROCE of 60.73% demonstrate a wide, low-cost moat in zinc mining.
• Free cash flow of ₹11,454 Cr comfortably covers the 4.80% dividend yield.
• Profit growth of 25.71% and sales growth of 11.81% show current momentum.
• Piotroski F-Score of 7/9 and Altman Z-Score of 9.96 point to underlying financial strength.
• Promoter holding at 60.71% aligns managing shareholders with public investors.

Concerns

• Valuation is stretched: P/E 21.86, P/B 18.26, EV/EBITDA 71.56, and a negative margin of safety of -322.97% versus Graham Number of ₹142.75.
• Current ratio of 0.43 and debt/equity of 0.82 signal potential liquidity strain for a cyclical miner.
• PEG of 1.93 implies that growth is not cheap after the recent profit surge.
• Commodity cyclicality could reverse, especially since 5-year revenue CAGR is only 8.54% despite the latest 25.71% profit growth.

AI Analysis

As a value investor, I look for quality at a reasonable price. Hindustan Zinc has extraordinary quality: an ROE of 86.16% and ROCE of 60.73% tell me this is a low-cost, integrated zinc franchise with a genuine moat. The latest quarter's sales of ₹10,922 Cr and net profit of ₹3,879 Cr, together with free cash flow of ₹11,454 Cr, show impressive earning power. The 4.80% dividend yield is well-supported. Promoter holding of 60.71% further aligns ownership with minority holders. But Graham taught me that no asset is worth any price. At ₹592.10, I am paying 21.86 times earnings and 18.26 times book value. The Graham Number for protection is only ₹142.75, leaving me a margin of safety of -322.97%. Even the DCF intrinsic value of ₹1,451.22 suggests a comfortable upside, but I remain wary of the 71.56 EV/EBITDA multiple and the 1.93 PEG ratio. The market has already priced in substantial growth. The balance sheet is not pristine: debt/equity of 0.82 and a current ratio of 0.43 are far from conservative for a cyclical commodity producer. While free cash flow covers near-term obligations, a downturn in zinc could squeeze liquidity. The Altman Z-Score of 9.96 provides some comfort, but it cannot replace liquidity discipline. Growth is attractive—sales up 11.81% and profit up 25.71%—yet the five-year revenue CAGR of 8.54% is more moderate. This is a steady compounder, not a runaway growth story. If zinc prices retreat, expectations will unwind. My verdict: a wonderful business with strong returns and cash flow, but selling at a demanding multiple. I would wait for a lower price, closer to the 52-week low of ₹418, or for the balance sheet to strengthen. Patience is the value investor's best friend.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer