Visit http://indiaer.blogspot.com/ for complete details Hindustan Zinc
For 2QFY2011, Hindustan Zinc (HZL) reported a 20% yoy and 10.9% qoq increase in net
revenue to `2,163cr. Sales volume for zinc, lead and silver increased by 24.4%, 27.0%
and 25.8% yoy, respectively, to 175,309 tonnes, 14,458 tonnes, and 36,879 kg. Average
realisation for zinc, lead and silver increased by 12.9%, 7.5% and 36.2% yoy, respectively,
to US $2,176/tonne, US $2, 285/tonne and US $656/kg, respectively. The new 210Ktpa
zinc smelter contributed ~39,000 tonnes.
EBITDA margins declined by 807bp yoy to 52.0%, although flat on a qoq basis. The
decline was mainly due to a) higher stripping costs at mines, resulting in a 29.7% yoy
increase in mining expenses, b) 90% yoy increase in stores and spares cost and c) 46.8%
yoy increase in power costs on account of increased coal costs. Consequently, EBITDA
grew by 4.6% yoy to `1,125cr. Other income increased by 19.7% yoy to `184cr and
depreciation expense increased by `50.2% to `115.8cr. Consequently, net income grew by
only 1.5% yoy to `949cr.
HZL is expected to benefit from the expansion of zinc-lead smelting capacity and increased
silver production. In addition, HZL has a huge cash balance of `12,213cr at the end of the
quarter (`289 per share). We recommend an Accumulate rating on the stock with a revised
Target Price of `1,342 earlier (`1,227), valuing the stock at 6.0x FY12012E EV/EBITDA.
No comments:
Post a Comment