Hindustan Zinc:-
“Hindustan Zinc (HZL) net sales at Rs27.1bn(-12.3%QoQ,-3.9%YoY) missed estimate primarily due to lower than expected refined metal ouput. Mined metal for Zinc declined by 4.3%YoY/17%QoQ to 162,000 tonnes as it continued to mine lower grade Zn ore at Rampura Agucha (RAM). However mined metal for Lead increased by 30.3%YoY as the production increased by 60%YoY at Sindesar Khurd mine. Silver sales also increased by 76%YoY/-2.7%QoQ to 72000 kgs due to commissioning of 350tonnes silver refinery at Pantnagar.”
“HZL cost of production of Zinc (excluding royalty) was at Rs45,579 per
tonne primarily due to increase in coal and other consumable cost.
EBITDA declined by 10.8%YoY/13.9%QoQ to Rs13.93bn (DCe:Rs14.84bn) due to
lower production and higher cost of production. Other income increased
by 59.8%YoY/50.7%QoQ due to increase in treasury yields and investment
surplus and one time mark to market gain of Rs1.2bn due to fall in
interest yields. HZL tax rate has decreased to 12.9% (DCe:20%) primarily
due to higher other income which was tax free. HZL profits rose by
12%YoY/5.8%QoQ to Rs15.8bn boosted by higher other income and lower tax
rate despite lower operating profits. HZL maintained its production and
sales guidance for the year and stated that the decline in grade at
Agucha mines were as per its expectation. HZL expects to start the
mining at 3 of its mines at Zawar in Q3FY13 which will add 30000 tonne
MIC Lead production.”
“HZL will continue to deliver strong free cash flows, despite higher
spending on the mine development at Kayar and Rampura Agucha. HZL
earnings growth will be driven by increase in silver and Lead volumes
which will lead to earnings CAGR of 12% over FY12-14. HZL is currently
trading at 4.4xFY13EV/EBITDA and 3.3xFY14EV/EBITDA. We maintain our
Accumulate rating with a target price of Rs134 (5.5x FY13 EV/EBITDA),”
says Dolat Capital research report.
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