Should You Invest in Hindustan Zinc or Hindalco Right Now?

Company Overview of Hindalco Industries Ltd

Hindalco Industries Limited, an India-based leading metals company, is involved in the production and global distribution of aluminium, copper, and related products. The company operates in four main segments: Novelis, Aluminium Upstream, Aluminium Downstream, and Copper. Novelis focuses on manufacturing and selling aluminium sheet and light gauge products across North America, South America, Europe, and Asia. 

The company’s upstream activities include bauxite and coal mining, alumina refining, metal production, and power generation. Its downstream operations involve the production of value-added aluminium products like flat rolled items, extrusions, and foils.  

Company Overview of Hindustan Zinc Ltd

Hindustan Zinc Limited, an India-based company, is involved in mineral exploration, extraction, processing, and the manufacturing of metals and alloys. The company’s product range includes zinc, lead, silver, commercial power, and alloys. Hindustan Zinc Limited operates in segments such as Zinc, Lead, Silver & others, and Wind energy. 

The company runs five zinc-lead mines, four zinc smelters, one lead smelter, one zinc-lead smelter, eight sulfuric acid plants, one silver refinery plant, six captive thermal power plants, and four captive solar plants in Rajasthan. 

The Stock Performance of Hindalco Industries

The table below displays the month-by-month stock performance of Hindalco Industries Ltd for the past year.

The Stock Performance of Hindustan Zinc Ltd

The table below displays the month-by-month stock performance of Hindustan Zinc Ltd for the past year.

Fundamental Analysis of Hindalco Industries Limited

Hindalco Industries Ltd is a flagship company of the Aditya Birla Group and stands as one of the largest producers of aluminum and copper in India. Established in 1958, Hindalco has expanded its operations globally, with a strong presence in sectors such as metals, mining, and downstream value-added products. The company is renowned for its commitment to sustainability and innovation, continually striving to enhance efficiency and reduce its environmental footprint.  

The stock closed at ₹564.00 with a market capitalization of ₹126,134.27 crore. It has a dividend yield of 0.62% and has experienced negative returns over the past year (-6.48%), six months (-22.76%), and one month (-18.71%), while achieving a 5-year CAGR of 39.29%.

• Close Price ( ₹ ): 564.00
• Market Cap ( Cr ): 126134.27
• Dividend Yield %: 0.62
• 1Y Return %: -6.48
• 6M Return %: -22.76
• 1M Return %: -18.71
• 5Y CAGR %: 39.29
• % Away From 52W High: 36.99
• 5Y Avg Net Profit Margin %: 4.38 

Fundamental Analysis of Hindustan Zinc Limited

Hindustan Zinc Limited (HZL) is a leading Indian company primarily engaged in the production of zinc, lead, and silver. Established in 1966, it has grown to become one of the largest zinc producers worldwide. The company operates several mines and smelters across India, contributing significantly to the country’s metal industry. 

The stock’s close price is ₹400.60 with a market capitalization of ₹169,266.28 crores and a dividend yield of 3.25%. Over the past year, it has returned -0.17%, while the 6-month and 1-month returns are -21.27% and -7.38%, respectively, despite a 19.34% CAGR over five years.  

• Close Price ( ₹ ): 400.60
• Market Cap ( Cr ): 169266.28
• Dividend Yield %: 3.25
• 1Y Return %: -0.17
• 6M Return %: -21.27
• 1M Return %: -7.38
• 5Y CAGR %: 19.34
• % Away From 52W High: 101.62 

Financial Comparison of Hindalco Industries and Hindustan Zinc Ltd

The table below shows a financial comparison of Hindalco Industries Ltd and Hindustan Zinc Ltd.

Points to be noted:

• (TTM) Trailing 12 Months: Trailing 12 months (TTM) is used to describe the past 12 consecutive months of a company’s performance data when reporting financial figures.
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): Measures a company’s profitability before accounting for financial and non-cash expenses.
• PBIT (Profit Before Interest and Tax): Reflects operating profit by excluding interest and taxes from total revenue.
• PBT (Profit Before Tax): Indicates profit after deducting operating costs and interest but before taxes.
• Net Income: Represents the company’s total profit after all expenses, including taxes and interest, are deducted.
• EPS (Earnings Per Share): Shows the portion of a company’s profit allocated to each outstanding share of stock.
• DPS (Dividend Per Share): Reflects the total dividend paid out per share over a specific period.
• Payout Ratio: Measures the proportion of earnings distributed as dividends to shareholders. 

Dividend of Hindalco Industries and Hindustan Zinc Ltd

Hindalco Industries offers steady dividends, with ₹3.5 per share in May 2024, while Hindustan Zinc Ltd provides significantly higher interim dividends, such as ₹19 in August 2024. Both companies maintain strong dividend payout histories. Check the table for complete details. 

Advantages and Disadvantages of Investing in Hindalco Industries

Hindalco Industries Ltd

The primary advantage of Hindalco Industries Ltd lies in its leadership in the aluminum and copper sectors. As a part of the Aditya Birla Group, the company benefits from strong financial backing, technological expertise, and a vast global presence, ensuring stable growth and expansion opportunities.

1. Market Leadership in Aluminum: Hindalco is one of the largest aluminum producers in India and a key global player. The company’s comprehensive aluminum production capacity—from bauxite mining to aluminum metal production—enables it to meet diverse industrial needs, contributing significantly to its revenue.
   
2. Copper Operations and Integration: Hindalco is also a major player in copper production, with a fully integrated business model. The company processes copper concentrate into refined copper, benefiting from economies of scale, cost efficiencies, and a robust demand from the electrical and manufacturing sectors.
   
3. Strong Global Presence: With operations across 13 countries, Hindalco has a vast global footprint. This international presence allows the company to tap into growing markets, mitigate regional risks, and leverage supply chain advantages, enhancing its long-term growth potential.
   
4. Focus on Sustainability: Hindalco is committed to sustainable practices, including reducing its carbon footprint and increasing the use of renewable energy. Its efforts to improve resource efficiency and reduce environmental impact align with global sustainability goals, enhancing its reputation and attracting responsible investors.
   
5. Strategic Acquisitions and Expansion: Hindalco’s acquisition of Novelis, the world’s largest recycler of aluminum, has strengthened its global market position. The acquisition boosts its product offerings and recycling capabilities, aligning with the growing demand for environmentally friendly materials in automotive and other industries. 

The main disadvantage of Hindalco Industries Ltd is its heavy reliance on the cyclical nature of the aluminum and copper industries. Fluctuations in global prices, demand shifts, and economic downturns can significantly impact the company’s profitability and operational stability.

1. Exposure to Commodity Price Volatility: Hindalco’s revenues are highly dependent on the prices of aluminum and copper, both of which can be volatile due to global supply-demand factors. A price drop in these metals can hurt profit margins and reduce overall earnings.
   
2. Environmental Regulations: As an industrial company, Hindalco faces strict environmental regulations related to mining and production processes. Compliance with environmental standards increases operational costs, and failure to meet these regulations can result in penalties or disruptions in production.
   
3. Geopolitical and Trade Risks: Hindalco operates globally, exposing it to risks from international trade policies, tariffs, and geopolitical tensions. Trade restrictions or disputes in key markets like the U.S. or China could disrupt its supply chain or affect profitability.
   
4. Dependency on Large-Scale Operations: Hindalco’s business model relies heavily on large-scale production and capital investment. Any inefficiencies or delays in large-scale projects, such as its aluminum plants or copper refineries, can lead to significant financial losses and delayed returns.
   
5. Currency Fluctuations: With operations in multiple countries, Hindalco faces risks related to currency exchange rates. Fluctuations in the value of currencies, particularly the Indian Rupee, can negatively impact revenues and costs, affecting the company’s profitability from international operations. 

Advantages and Disadvantages of Investing in Hindustan Zinc Ltd  

Hindustan Zinc Ltd

​The primary advantage of Hindustan Zinc Ltd lies in its position as the world’s second-largest integrated producer of zinc, lead, and silver. With a fully integrated business model encompassing mining, smelting, refining, and captive power generation, the company maintains a competitive edge through cost efficiency and operational scale.​ 

1. Market Leadership: Hindustan Zinc holds approximately 75% market share in India’s primary zinc industry and is among the top global producers of silver, enhancing its influence in the metals market. ​ 
2. Cost Efficiency: The company benefits from low production costs, with zinc production costs around $1,100 ( Rs 93,786 ) per tonne, positioning it favorably against higher-cost global smelters. 
3. Sustainable Practices: Hindustan Zinc is committed to sustainability, aiming to transition to renewable energy sources over the next five to seven years to reduce its carbon footprint. 
4. Expansion Plans: The company plans to double its production capacity to 2 million tonnes by 2028, focusing on capturing the Middle East market and replacing European smelters. 
5. Financial Strength: Hindustan Zinc maintains a strong financial position with substantial reserves and surplus, supporting its growth initiatives and shareholder returns.

The main disadvantage of Hindustan Zinc Ltd lies in its reliance on the zinc and lead markets, which are exposed to fluctuations in global commodity prices. A downturn in these markets could significantly impact the company’s profitability and long-term growth prospects.

1. Commodity Price Volatility: Hindustan Zinc’s revenue is largely dependent on zinc, lead, and silver prices. Any significant decline in global demand or prices for these metals can adversely affect profitability, as the company’s operations are directly linked to commodity market conditions.
   
2. Environmental and Regulatory Risks: Mining operations are subject to strict environmental regulations. Hindustan Zinc must continuously manage its environmental impact, ensuring compliance with local and international standards. Any new regulatory policies could increase operational costs or delay projects, reducing profitability.
   
3. Geopolitical Risks: Hindustan Zinc’s operations are spread across various regions, including India and other countries. Political instability, changes in government policies, or regulatory changes in these regions could disrupt operations, leading to increased costs or delays in project implementation.
   
4. Limited Diversification: While Hindustan Zinc is a leader in zinc production, its heavy focus on zinc and lead mining limits revenue diversification. Economic or market shifts that reduce demand for these metals could make the company vulnerable to financial instability. 

How to Invest in Hindustan Zinc and Hindalco Industries Stocks?

If you’re interested in investing in Hindustan Zinc and Hindalco Industries Stocks, you can do so effortlessly through Alice Blue, which offers zero brokerage on equity delivery trades, allowing you to purchase stocks without any additional charges.

Step 1: Open a Demat & Trading Account

• Visit the Alice Blue website.
• Click on “Open Demat Account” and complete the registration process.
• Upload your PAN, Aadhaar, and bank details for verification.

Step 2: Fund Your Trading Account

• Log in to Alice Blue and navigate to the Funds section.
• Deposit money using UPI, Net Banking, or NEFT/RTGS for seamless transactions.

Step 3: Search & Analyze Hindustan Zinc and Hindalco Industries Stocks

• Use the search bar to find Hindustan Zinc and Hindalco Industries Stocks.
• Review the stock’s market price, charts, and company insights before making a decision.

Step 4: Place Your Buy Order

• Click “Buy” and select either a Market Order (instant purchase) or a Limit Order (buy at a specified price).
• Enter the quantity and confirm your order to complete the purchase.

Hindalco Industries vs. Hindustan Zinc – Conclusion

Hindalco Industries Ltd is a global leader in aluminum and copper production with diversified operations across various sectors, including metals, mining, and energy. Its strong financial performance and extensive market reach position it well for long-term growth, despite being sensitive to commodity price fluctuations.

Hindustan Zinc Ltd dominates India’s zinc production and is a key player in global silver and lead markets. With strong profitability, a focus on zinc, and an impressive dividend history, it offers a stable and attractive investment, though it faces challenges from its concentration in the zinc sector.

Hindalco Industries vs. Hindustan Zinc – FAQ

Disclaimer: The above article is written for educational purposes, and the companies’ data mentioned in the article may change over time. The securities quoted are exemplary and are not recommended.