Hindustan Zinc surges 19% to a record; experts against fresh entry now
optimism around increased industrial usage of the metal have fuelled a rally in the shares of Hindustan Zinc, which surged nearly 19% intra-day Friday to hit a lifetime high of ₹540.95. With Friday's gains, the shares have gained more than a staggering 80% since April, with a rally in zinc prices also contributing to the gains.
While the stock remains in a positive momentum, experts are cautioning against buying the stock at current levels, and in fact, recommend taking some profits off the table given that valuations are expensive after the recent gains.
«Some of the key concerns for the company include the increase in debt level over the last two years, no major institutional players for the company and company already operating at optimal level,» said Parthiv Jhonsa, analyst at Anand Rathi Institutional Equities. «And because it has a limited free float, movement in the company tends to be quite drastic,» he said.
Nearly 65% of Hindustan Zinc is owned by Vedanta, while the government owns another 29.5% stake. Insurance companies own nearly 3% of the company, leaving it with a limited free float.
Hindustan Zinc is the country's largest producer of both zinc and silver, and while zinc and lead bought in around 55% of its consolidated operating profit, silver's contribution has risen to a hefty 45% in 2023-24 (Apr-Mar), from around 36% a year ago.
The prices of silver, meanwhile, are up 13% since April, and were close to Rs 86,000/kg on the MCX on Friday. Zinc prices have rallied more than 20% since April.
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