Hindustan Zinc Initiating Coverage; It’s got the silver lining; Buy; Target: Rs 173 ::Emkay

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Hindustan Zinc Initiating Coverage; It’s got the silver lining; Buy; Target: Rs 173

n    World’s largest integrated zinc producer with mines, smelters and captive power. High grade reserve - resource base with 25 years mine-life assures sustainable growth

n    First quartile unit cost of production at US$808/ tonne in FY11 (which is about 50% of the global marginal cost of production) to help EBITDA margins remain well above 50%

n    Current expansions to lead to significant contribution by the silver business to bottomline. Cash per share to increase to Rs 57 in FY13E

n    We like its stable business with strong potential and attractive valuations, which should outplay short- term concerns; Initiate coverage with a target price of Rs 173; Buy