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Hindustan Zinc
4QFY11 production results
Hindustan Zinc reported its 4QFY11 production numbers today. Refined zinc and
lead posted strong qoq growth of 9% and 29% respectively. The 100kt lead
smelter is now expected to be commissioned by 1QFY12 and this will drive
incremental lead and silver volumes in FY12.
Strong zinc production driven by Dariba smelter; lead production recovers qoq
! Refined zinc production in 4QFY11 was 194kt (+29% yoy and +9% qoq) and 712kt for FY11
(23% yoy). 4Q production was stronger than expected and compares to our estimate of 179kt.
Zinc volumes were driven by the new 210kt Dariba smelter which contributed 46kt and 165kt
for the quarter and full year respectively. Lead production in 4QFY11 recovered qoq to 18kt (-
10% yoy and +29% qoq) after the maintenance shutdown at the Ausmelt and Pyro smelters
last quarter (our estimate: 15kt). FY11 production was 63kt, 13% lower yoy mainly due to the
loss of production in the 1H due to shortage of water. Sale of surplus zinc and lead
concentrate was 30kt and 18kt respectively in 4QFY11 and 66kt and 39kt respectively for
FY11.
100kt lead smelter to be commissioned only by 1QFY12
! We note that commissioning of the 100kt lead smelter has been delayed by one quarter to
1QFY12. The 1.5mt Sindesar Khurd mine is ramping up on schedule and once the 100kt lead
smelter is commissioned, both refined lead and silver (by product of lead smelting) production
will ramp-up. We note that since the ramp-up at the 1.5mt SK mine is on schedule, company
does have the option of selling surplus lead concentrate in 1QFY12.
Silver capacity ramp-up to be back-ended in FY12
! Silver production was 1.6moz (-3% yoy and +19% yoy) in 4QFY11 and 5.7moz (+1% yoy) for
FY11. Excluding captive consumption of 0.22moz and 1moz for 4QFY11 and FY11
respectively, saleable production was 1.4moz and 4.7moz for 4Q and FY11 respectively. Due
to the slight delay in commissioning of the 100kt lead smelter, silver capacity ramp-up is
expected to be back-ended in FY12. We note that with silver price at a 30-year high of
US$40/oz, it will be a key earnings driver for HZN. We have conservatively modeled 7moz of
external sales at an average price of US$30/oz for FY12F.
48MW of 150MW wind power capacity commissioned
! 48MW of the new 150MW wind power capacity has been commissioned in March 2011 with
the remaining expected to be up by FY12. This will increase the total wind power capacity to
273MW. The second 80MW CPP of the Dariba smelter was also commissioned in February
2011. 63MU of surplus power was generated from CPP's in 4QFY11 (+80% yoy). Wind power
sales was 45MU (+2% yoy).
! We have a Buy rating on Hindustan Zinc with target price of Rs167.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Hindustan Zinc
4QFY11 production results
Hindustan Zinc reported its 4QFY11 production numbers today. Refined zinc and
lead posted strong qoq growth of 9% and 29% respectively. The 100kt lead
smelter is now expected to be commissioned by 1QFY12 and this will drive
incremental lead and silver volumes in FY12.
Strong zinc production driven by Dariba smelter; lead production recovers qoq
! Refined zinc production in 4QFY11 was 194kt (+29% yoy and +9% qoq) and 712kt for FY11
(23% yoy). 4Q production was stronger than expected and compares to our estimate of 179kt.
Zinc volumes were driven by the new 210kt Dariba smelter which contributed 46kt and 165kt
for the quarter and full year respectively. Lead production in 4QFY11 recovered qoq to 18kt (-
10% yoy and +29% qoq) after the maintenance shutdown at the Ausmelt and Pyro smelters
last quarter (our estimate: 15kt). FY11 production was 63kt, 13% lower yoy mainly due to the
loss of production in the 1H due to shortage of water. Sale of surplus zinc and lead
concentrate was 30kt and 18kt respectively in 4QFY11 and 66kt and 39kt respectively for
FY11.
100kt lead smelter to be commissioned only by 1QFY12
! We note that commissioning of the 100kt lead smelter has been delayed by one quarter to
1QFY12. The 1.5mt Sindesar Khurd mine is ramping up on schedule and once the 100kt lead
smelter is commissioned, both refined lead and silver (by product of lead smelting) production
will ramp-up. We note that since the ramp-up at the 1.5mt SK mine is on schedule, company
does have the option of selling surplus lead concentrate in 1QFY12.
Silver capacity ramp-up to be back-ended in FY12
! Silver production was 1.6moz (-3% yoy and +19% yoy) in 4QFY11 and 5.7moz (+1% yoy) for
FY11. Excluding captive consumption of 0.22moz and 1moz for 4QFY11 and FY11
respectively, saleable production was 1.4moz and 4.7moz for 4Q and FY11 respectively. Due
to the slight delay in commissioning of the 100kt lead smelter, silver capacity ramp-up is
expected to be back-ended in FY12. We note that with silver price at a 30-year high of
US$40/oz, it will be a key earnings driver for HZN. We have conservatively modeled 7moz of
external sales at an average price of US$30/oz for FY12F.
48MW of 150MW wind power capacity commissioned
! 48MW of the new 150MW wind power capacity has been commissioned in March 2011 with
the remaining expected to be up by FY12. This will increase the total wind power capacity to
273MW. The second 80MW CPP of the Dariba smelter was also commissioned in February
2011. 63MU of surplus power was generated from CPP's in 4QFY11 (+80% yoy). Wind power
sales was 45MU (+2% yoy).
! We have a Buy rating on Hindustan Zinc with target price of Rs167.
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