New Delhi: Insights from Hindustan Zinc’s FY26 Annual Report highlight how strong capital efficiency, robust cash generation and disciplined capital allocation are providing the foundation for the company’s next phase of growth. According to the report, Hindustan Zinc delivered a return on capital employed (ROCE) of approximately 67% during FY26, the highest in 18 years, while continuing to maintain one of the lowest cost positions globally.
The company generated free cash flow from operations of ₹13,337 crore during the year, highlighting its ability to convert earnings into cash while maintaining financial flexibility for future investments.
The annual report also highlights a significant improvement in value creation metrics. Economic Value Added (EVA), which measures the wealth created after accounting for the cost of capital, increased 138% to ₹11,643 crore in FY26 from ₹4,900 crore in FY25. EVA as a percentage of average capital employed rose to 73.9%, reflecting Hindustan Zinc’s ability to generate returns well above its cost of capital while maintaining disciplined capital allocation.
A key contributor to performance was sustained focus on cost leadership. Zinc cost of production (excluding royalty) declined by 9% year-on-year to a five-year low of US$959 per tonne, reinforcing Hindustan Zinc’s position among the world’s lowest-cost zinc producers. The company also increased the share of domestic coal in its fuel mix and expanded renewable energy sourcing, helping strengthen resilience against commodity and energy price volatility.
The performance comes amid a period of global economic uncertainty, commodity market volatility and evolving trade dynamics, underscoring the strength of Hindustan Zinc’s integrated business model and disciplined approach to capital allocation.
The Annual Report outlines the company’s HZL 2.0 strategy, which envisages an overall growth capex programme of ₹40,000–50,000 crore over the next five years. The programme is aimed at nearly doubling refined metal capacity to 2.0 million tonnes per annum while expanding into critical minerals and future-facing sectors aligned with India’s industrial, infrastructure and energy transition priorities.
A key pillar of this long-term growth strategy is resource expansion. The report highlights the company’s ambition to increase metal reserves from 13 Mnt to 50 Mnt while supporting a mine life of over 25 years. Hindustan Zinc has also secured critical mineral blocks in rare earth elements, tungsten and potash, reinforcing its ambition of building a diversified, future-ready metals and mining business while contributing to India’s resource security objectives.
Priya Agarwal Hebbar, Chairperson, Hindustan Zinc Limited, said, “The world is going through a generational inflection point, one where minerals and metals have moved to the centre of global geopolitics and geoeconomics, much as oil once did. Mineral security is now national security. India is actively pursuing self-sufficiency in critical minerals, and Hindustan Zinc is ready to help lead that journey – expanding well beyond our zinc-silver legacy into a broader, strategically relevant multi-metal portfolio.”
She added, “At Hindustan Zinc, we have always tried to stay ahead of the curve on growth opportunities and at the bottom of the curve on costs. That is the best way to future-proof the company and be ready to perform at our best irrespective of external circumstances. Our Board has approved our most ambitious capex programme, aimed at doubling the refined metal capacity to 2.0 Mtpa, which will almost double the annual revenue and EBITDA.”
The company’s financial performance during FY26 underscores the strength of this growth platform. The annual report notes that Hindustan Zinc reported record revenue of ₹40,844 crore and EBITDA of ₹22,162 crore during FY26, with EBITDA margins of approximately 54%. It also achieved its highest-ever mined metal production of 1,114 kt, reflecting continued operational excellence across its mining and smelting operations.
As investors increasingly look beyond earnings growth and focus on the quality of returns, cash flows and capital allocation, Hindustan Zinc’s FY26 performance offers a case study in how operational efficiency and cost competitiveness can translate into sustained value creation. The company’s strong balance sheet, free cash flow generation and return profile provide a solid platform as it advances HZL 2.0 and pursues the next phase of growth.
