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'Hindustan Zinc
R e s u l t s i n l i n e w i t h e x p e c t a t i o n …
Hindustan Zinc’s (HZL) Q1FY12 numbers were in line with our estimates.
Net sales came in at | 2821.35 crore (I-direct estimate: | 2845.2 crore)
registering robust growth of ~45% YoY against a decline of ~12% QoQ.
Sales growth was supported by healthy growth in volumes (up ~16%
YoY) and improved LME realisations (up ~11% YoY). EBITDA margins
have improved by 406 bps YoY on the back of higher realisations. Net
profit jumped ~68% YoY to | 1494.9 crore (I-direct estimate: | 1447.6
crore), mainly driven by a sharp increase in other income (up ~125% YoY
and ~17% QoQ).
ƒ Expansion projects
The 1,00,000 MT lead smelter at Dariba has been commissioned and
is currently under the trial run phase. This new lead smelter will also
feed the new upcoming 350 tonne silver refinery. The management
is confident of starting commercial production of the lead and silver
smelter by Q2FY12.
ƒ Volumes not impacted despite unplanned shutdown
HZL had to undertake an unplanned shutdown for two weeks at the
Rampura Agucha Mine due to some technical error with the crusher.
However, the mining volume was not impacted as the shortfall from
Rampura Agucha was met from production at the Sindesar Khurd
Mine. Currently, production at this mine (Rampura Agucha) is
operational and is being ramped up as per schedule. The
management is confident of recovering the shortfall in production in
the coming quarters of FY12.
V a l u a t i o n
At the CMP of | 138, the stock is trading at FY12E EV/EBITDA of 5.8x and
FY13E EV/EBITDA of 4.4x. We have reduced our EV/EBITDA multiple to
factor in the risk associated with the implementation of the new mining
bill. Thus, we have valued HZL at FY13E EV/EBITDA of 5.0x to arrive at
our target price of | 148. We maintain our HOLD rating on the stock
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
'Hindustan Zinc
R e s u l t s i n l i n e w i t h e x p e c t a t i o n …
Hindustan Zinc’s (HZL) Q1FY12 numbers were in line with our estimates.
Net sales came in at | 2821.35 crore (I-direct estimate: | 2845.2 crore)
registering robust growth of ~45% YoY against a decline of ~12% QoQ.
Sales growth was supported by healthy growth in volumes (up ~16%
YoY) and improved LME realisations (up ~11% YoY). EBITDA margins
have improved by 406 bps YoY on the back of higher realisations. Net
profit jumped ~68% YoY to | 1494.9 crore (I-direct estimate: | 1447.6
crore), mainly driven by a sharp increase in other income (up ~125% YoY
and ~17% QoQ).
ƒ Expansion projects
The 1,00,000 MT lead smelter at Dariba has been commissioned and
is currently under the trial run phase. This new lead smelter will also
feed the new upcoming 350 tonne silver refinery. The management
is confident of starting commercial production of the lead and silver
smelter by Q2FY12.
ƒ Volumes not impacted despite unplanned shutdown
HZL had to undertake an unplanned shutdown for two weeks at the
Rampura Agucha Mine due to some technical error with the crusher.
However, the mining volume was not impacted as the shortfall from
Rampura Agucha was met from production at the Sindesar Khurd
Mine. Currently, production at this mine (Rampura Agucha) is
operational and is being ramped up as per schedule. The
management is confident of recovering the shortfall in production in
the coming quarters of FY12.
V a l u a t i o n
At the CMP of | 138, the stock is trading at FY12E EV/EBITDA of 5.8x and
FY13E EV/EBITDA of 4.4x. We have reduced our EV/EBITDA multiple to
factor in the risk associated with the implementation of the new mining
bill. Thus, we have valued HZL at FY13E EV/EBITDA of 5.0x to arrive at
our target price of | 148. We maintain our HOLD rating on the stock
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