Should you buy Vedanta shares after subsidiary Hindustan Zinc beats D-Street estimates in Q2 results? What analyst says

Vedanta shares are in focus after its subsidiary Hindustan Zinc reported a sharp jump in second-quarter profit and beat Street estimates, prompting brokerage Emkay Global Financial Services to maintain its bullish stance on the mining major.

Analyst at Emkay Global have reiterated its Buy rating on Vedanta with a target price of ₹350, against the current market price of ₹243 as of 19 October, implying a potential upside of around 44%. The brokerage expects strong operating performance at Hindustan Zinc, which contributes approximately 90% of Vedanta's consolidated EBITDA, to support earnings growth in FY27.

Hindustan Zinc reported a 142% year-on-year increase in consolidated net profit to ₹6,412 crore for the quarter ended 30 September 2026, compared with ₹2,649 crore in the year-ago period. Revenue from operations rose 76.5% to ₹15,093 crore from ₹8,549 crore.

Vedanta share price today, 21 October, ended 2.98% lower at ₹235.75 per share on the BSE.

According to Emkay Global, Hindustan Zinc's reported EBITDA rose 14.2% sequentially to ₹9,290 crore, beating the brokerage's estimate by 6.9% and consensus expectations by 9.2%.

The improvement was largely driven by lower zinc costs of production (CoP), which fell to $703 per tonne in Q2 from $851 per tonne in the June quarter. Higher realisations from sulphuric acid and increased sequential volumes of silver and lead also supported profitability, alongside rupee depreciation.

Hindustan Zinc's EBITDA margin remained robust at 61.3%, while profit after tax increased to ₹6,410 crore from ₹5,470 crore in the previous quarter. The company also generated record free cash flow of ₹6,200 crore, ending the quarter with net cash of ₹11,270 crore.

Emkay believes that improvements in production costs and operating performance strengthen the earnings outlook for Vedanta, given Hindustan Zinc's substantial contribution to the parent company's profitability.

Hindustan Zinc has reduced its FY27 zinc cost-of-production guidance to $825–850 per tonne from the earlier $975–1,000 per tonne. Emkay noted that elevated sulphuric acid prices and higher production could provide further support to costs.

The company has also retained its silver production target of 680 tonnes for FY27, with approximately 340 tonnes delivered in the first half. The brokerage said the absence of major maintenance shutdowns in the remainder of the financial year supports confidence in achieving the target.

Emkay remains constructive on the medium-term outlook for zinc and silver, citing supply deficits in both markets. It expects healthy production volumes and supportive zinc prices to sustain earnings momentum in the second half of FY27.

However, the brokerage flagged the recent correction in silver prices as a near-term risk to silver earnings. It expects higher volumes over the coming quarters to offset much of this pressure.

Emkay estimates Hindustan Zinc will generate EBITDA of ₹30,200 crore in FY27, accounting for around 90% of Vedanta's consolidated EBITDA. It believes favourable zinc and silver prices, combined with strong margin visibility, could support earnings growth.

The brokerage noted that zinc and silver prices are currently 23% and 28% above their respective FY26 average levels. If spot prices sustain around $3,731 per tonne for zinc and $58 per ounce for silver, earnings could see further upside.

Hindustan Zinc's position in the first quartile of the global zinc cost curve also supports Emkay's positive outlook on its earnings and growth prospects.

Based on the strong Q2 performance and improved cost outlook, Emkay expects the results to support an upgrade to its FY27 earnings estimates. It has maintained its Buy rating on Vedanta and kept its target price unchanged at ₹350.

What investors should watch: The sustainability of zinc and silver prices, Hindustan Zinc's ability to deliver on its production and cost guidance, and the impact of any further correction in silver prices will be key to determining whether the earnings momentum can continue through the second half of FY27.

Dhanya Nagasundaram works as a Content Producer at LiveMint, specializing in news related to financial markets, stocks, and business. With over eight years of experience in journalism and content creation, she has honed her skills in data-driven reporting and market analysis. Her focus is on monitoring stock trends, initial public offerings (IPOs), corporate news, policy shifts, and larger economic trends that affect investors and market players. <br><br> At LiveMint, Dhanya consistently writes and produces articles that make complex financial topics accessible to readers. She keeps a close eye on equity markets, commodities, and macroeconomic indicators, assisting audiences in comprehending how global and domestic events influence investment perspectives. Her stories frequently underscore emerging trends within sectors, the IPO market, company earnings results, and market strategies pertinent to both retail and institutional investors. <br><br> Before her tenure at LiveMint, Dhanya accumulated a wealth of professional experience at various companies, including MintGenie, Informist, Cogenics, Chary Publications, KPMG, and the Royal Bank of Scotland. These positions allowed her to establish a solid foundation in financial research, reporting, and content creation. <br><br> Throughout her career, she has explored numerous subjects such as trading strategies, commodities, IPOs, wealth generation, corporate profits, and macroeconomic indicators. Her background in both financial journalism and corporate settings has given her the ability to tackle stories with analytical rigor while ensuring clarity for her audience. Through her contributions, Dhanya strives to deliver insightful, trustworthy, and investor-centric financial content.

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