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For 2QFY2012, Hindustan Zinc’s (HZL) net revenue at `2,593cr was in-line with
our estimate of `2,643cr, while adjusted PAT at `1,369cr was above our estimate
of `1,265cr. We recommend Accumulate on the stock.
Robust top-line performance in 2QFY2012: For 2QFY2012, HZL’s net revenue
increased by 19.9% yoy to `2,593cr on account of higher sales volume and
realization. Zinc, lead and silver sales volumes grew by 5.0%, 1.6% and 12.4%
yoy to 184kt, 15kt and 41,454kg, respectively. Average zinc, lead and silver
realization increased by 7.4%, 14.2% and 96.6% yoy, respectively.
Strong growth in net profit: Zinc cost of production (excluding royalty) stood at
US$847/tonne in 2QFY2012 compared to US$874/tonne in 1QFY2012,
reflecting the qoq INR depreciation against the USD. EBITDA margin expanded by
445bp yoy to 56.5% on account of higher realization. EBITDA grew by 30.2% yoy
to `1,465cr. Further, other income was higher by 110.2% yoy to `387cr, which
resulted in adjusted PAT growing by 41.1% yoy to `1,369cr.
Outlook and valuation: Currently, the stock is trading at 5.7x FY2012E and 3.9x
FY2013E EV/EBITDA. We expect HZL to benefit from the expansion of zinc-lead
smelting capacity during FY2012-13. Furthermore, HZL’s expansion in the
silver-rich Sindesar Khurd mine should result in robust bottom-line growth since
there are no additional direct costs involved in silver mining. The company’s
cash and equivalents stood at `16,229cr as of September 30, 2011 (cash per
share - `38.4). We recommend Accumulate on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
For 2QFY2012, Hindustan Zinc’s (HZL) net revenue at `2,593cr was in-line with
our estimate of `2,643cr, while adjusted PAT at `1,369cr was above our estimate
of `1,265cr. We recommend Accumulate on the stock.
Robust top-line performance in 2QFY2012: For 2QFY2012, HZL’s net revenue
increased by 19.9% yoy to `2,593cr on account of higher sales volume and
realization. Zinc, lead and silver sales volumes grew by 5.0%, 1.6% and 12.4%
yoy to 184kt, 15kt and 41,454kg, respectively. Average zinc, lead and silver
realization increased by 7.4%, 14.2% and 96.6% yoy, respectively.
Strong growth in net profit: Zinc cost of production (excluding royalty) stood at
US$847/tonne in 2QFY2012 compared to US$874/tonne in 1QFY2012,
reflecting the qoq INR depreciation against the USD. EBITDA margin expanded by
445bp yoy to 56.5% on account of higher realization. EBITDA grew by 30.2% yoy
to `1,465cr. Further, other income was higher by 110.2% yoy to `387cr, which
resulted in adjusted PAT growing by 41.1% yoy to `1,369cr.
Outlook and valuation: Currently, the stock is trading at 5.7x FY2012E and 3.9x
FY2013E EV/EBITDA. We expect HZL to benefit from the expansion of zinc-lead
smelting capacity during FY2012-13. Furthermore, HZL’s expansion in the
silver-rich Sindesar Khurd mine should result in robust bottom-line growth since
there are no additional direct costs involved in silver mining. The company’s
cash and equivalents stood at `16,229cr as of September 30, 2011 (cash per
share - `38.4). We recommend Accumulate on the stock.
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