Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Hindustan Zinc
4QFY11 results: Above expectations
Hindustan Zinc reported strong results earlier today. 4QFY11 EBITDA was
Rs19.3bn and net profit was Rs17.7bn. The earnings beat does not come entirely
as a surprise with the robust production numbers it reported last week. We have
a Buy rating on the stock with target price of Rs167.
4QFY11 results: Above expectations driven by robust production growth
! Net revenues at Rs31.9bn (+26% yoy and +23% qoq) driven by higher production numbers
and LME prices were higher than our estimate of Rs28.2bn. Refined zinc production was
194kt (+29% yoy and +9% qoq), lead saleable production was 16.6kt (-9% yoy and +33%
qoq), while silver saleable production was 42.9 tonnes (flat yoy and +31% qoq). These were
all higher than our estimates of 179kt of zinc, 15kt of lead and 36 tonnes of silver respectively.
Earnings were also driven by concentrate sales (30kt of zinc concentrate and 18kt of lead
concentrate rich in silver).
! Mining royalty increased to Rs2.5bn (+32% yoy and +14% qoq) driven by higher volumes,
LME prices and royalty rates. Employee costs increased 19% qoq to Rs1.3bn.
! Stronger-than-expected production growth drove EBITDA to Rs19.3bn (+25% yoy and +30%
qoq) versus our expectation of Rs15.9bn.
! Other income was higher than expected at Rs3.5bn (+155% yoy and +45% qoq) with higher
interest earned on time deposits and liquid investments.
! Net profit was Rs17.7bn (+43% yoy and +37% qoq).
FY11 results summary
! Commissioning of the 210kt Dariba smelter drove FY11 zinc production to 712kt (+23% yoy)
for FY11. The Dariba smelter contributed 165kt for the year. Lead production declined 13%
yoy to 63kt due to issue of water shortage experienced in 1HFY11. Silver production was
flattish at 179kt.
! Net revenues for FY11 were at Rs99.1bn (+23% yoy), EBITDA was Rs54.9bn (+16% yoy)
and net profit was Rs49bn (+21% yoy).
Conference call highlights
! Update on expansion projects: The 1.5mt Sindesar Khurd mine is ramping up well and
achieved 85% utilization in March. Management expects it to operate at the rated capacity for
FY12. The 100kt lead smelter is scheduled to be commissioned in 1QFY12. Silver capacity is
also linked with the lead smelter commissioning and the company expects to produce 350-
400 tonnes of silver in FY12. We have currently modeled FY12/13 silver volumes of 227/274
tonnes and average LME price of US$30/oz. Assuming current spot price of US$46/oz and
400 tonnes of volumes, our FY12/13 EPS estimates would increase from Rs16.4/Rs18.6 to
Rs19.1/Rs21.
! Cost of production to continue to be below ~US$800/t: Management highlighted that they
expect to keep cost of production (excluding royalty cost) at below US$800/t for FY12. Cost of
production was US$784/t in 4QFY11 and US$808/t for FY11. The price hike by Coal India is
not expected to impact the company significantly with only about 25-30% of coal sourced
through linkage and balance is met through imports. Power consumption during zinc-lead
production is also significantly lower as compared to other metals like aluminium. (power and
fuel costs constitutes ~20% of all expenses).
! 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 taking total power capacity to
474MW.
! Addition to reserves: The company achieved significant success with an increase of 22.1mt to
the reserves and resources, prior to a depletion of 7.5mt in FY 2011. Contained zinc-lead
metal has increased by 1.4mt, prior to a depletion of 0.84mt during the same period. Total
reserves and resources at 31 March 2011 were 313.2mt containing 34.7mt of zinc-lead metal
(35 years life at current capacity of 1mt) and 885mn oz of silver.
! Liquidity: As at 31 March 2011, the Company had cash and cash equivalents of Rs149.6bn
(Rs35/share), including Rs93.3bn invested in debt mutual funds and Rs55.5bn in fixed
deposits with banks.
! 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 results: Above expectations
Hindustan Zinc reported strong results earlier today. 4QFY11 EBITDA was
Rs19.3bn and net profit was Rs17.7bn. The earnings beat does not come entirely
as a surprise with the robust production numbers it reported last week. We have
a Buy rating on the stock with target price of Rs167.
4QFY11 results: Above expectations driven by robust production growth
! Net revenues at Rs31.9bn (+26% yoy and +23% qoq) driven by higher production numbers
and LME prices were higher than our estimate of Rs28.2bn. Refined zinc production was
194kt (+29% yoy and +9% qoq), lead saleable production was 16.6kt (-9% yoy and +33%
qoq), while silver saleable production was 42.9 tonnes (flat yoy and +31% qoq). These were
all higher than our estimates of 179kt of zinc, 15kt of lead and 36 tonnes of silver respectively.
Earnings were also driven by concentrate sales (30kt of zinc concentrate and 18kt of lead
concentrate rich in silver).
! Mining royalty increased to Rs2.5bn (+32% yoy and +14% qoq) driven by higher volumes,
LME prices and royalty rates. Employee costs increased 19% qoq to Rs1.3bn.
! Stronger-than-expected production growth drove EBITDA to Rs19.3bn (+25% yoy and +30%
qoq) versus our expectation of Rs15.9bn.
! Other income was higher than expected at Rs3.5bn (+155% yoy and +45% qoq) with higher
interest earned on time deposits and liquid investments.
! Net profit was Rs17.7bn (+43% yoy and +37% qoq).
FY11 results summary
! Commissioning of the 210kt Dariba smelter drove FY11 zinc production to 712kt (+23% yoy)
for FY11. The Dariba smelter contributed 165kt for the year. Lead production declined 13%
yoy to 63kt due to issue of water shortage experienced in 1HFY11. Silver production was
flattish at 179kt.
! Net revenues for FY11 were at Rs99.1bn (+23% yoy), EBITDA was Rs54.9bn (+16% yoy)
and net profit was Rs49bn (+21% yoy).
Conference call highlights
! Update on expansion projects: The 1.5mt Sindesar Khurd mine is ramping up well and
achieved 85% utilization in March. Management expects it to operate at the rated capacity for
FY12. The 100kt lead smelter is scheduled to be commissioned in 1QFY12. Silver capacity is
also linked with the lead smelter commissioning and the company expects to produce 350-
400 tonnes of silver in FY12. We have currently modeled FY12/13 silver volumes of 227/274
tonnes and average LME price of US$30/oz. Assuming current spot price of US$46/oz and
400 tonnes of volumes, our FY12/13 EPS estimates would increase from Rs16.4/Rs18.6 to
Rs19.1/Rs21.
! Cost of production to continue to be below ~US$800/t: Management highlighted that they
expect to keep cost of production (excluding royalty cost) at below US$800/t for FY12. Cost of
production was US$784/t in 4QFY11 and US$808/t for FY11. The price hike by Coal India is
not expected to impact the company significantly with only about 25-30% of coal sourced
through linkage and balance is met through imports. Power consumption during zinc-lead
production is also significantly lower as compared to other metals like aluminium. (power and
fuel costs constitutes ~20% of all expenses).
! 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 taking total power capacity to
474MW.
! Addition to reserves: The company achieved significant success with an increase of 22.1mt to
the reserves and resources, prior to a depletion of 7.5mt in FY 2011. Contained zinc-lead
metal has increased by 1.4mt, prior to a depletion of 0.84mt during the same period. Total
reserves and resources at 31 March 2011 were 313.2mt containing 34.7mt of zinc-lead metal
(35 years life at current capacity of 1mt) and 885mn oz of silver.
! Liquidity: As at 31 March 2011, the Company had cash and cash equivalents of Rs149.6bn
(Rs35/share), including Rs93.3bn invested in debt mutual funds and Rs55.5bn in fixed
deposits with banks.
! We have a Buy rating on Hindustan Zinc with target price of Rs167.
No comments:
Post a Comment