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P e r f o r m a n c e s l i g h t l y b e l o w e x p e c t a t i o n …
Hindustan Zinc’s (HZL) Q2FY12 numbers were slightly below our
estimates, primarily due to muted sales volumes. While the refined zinc
sales volumes registered a decline of ~4% QoQ, refined lead sales
volumes were flat on a sequential basis. Net sales came in at | 2593.5
crore (I-Direct estimate: | 2853.5 crore) registering de-growth of ~8%
QoQ. EBITDA margins have improved by 10 bps QoQ and 450 bps YoY.
Net profit jumped ~41.7% YoY to | 1344.7 crore (I-Direct estimate: |
1414.3 crore), mainly driven by a sharp increase in other income (up
~110% YoY and ~9% QoQ).
ƒ Lower sales volumes lead to a subdued topline on a QoQ basis
In Q2FY12, HZL reported ~8% decline in topline on a QoQ basis on
account of muted sales volumes. During the quarter under review,
refined zinc sales volumes stood at 184161 tonnes registering a
decline of ~4% QoQ while refined lead sales volumes remained flat
at 14,686 tonnes.
ƒ Expansion projects
The 1,00,000 tonnes per annum (TPA) lead smelter at Dariba was
commissioned during the quarter, taking the total refining capacity of
lead to ~1,85,000 TPA. The ramp-up of the Sindesar Khurd mine is
on track to achieve its targeted 2.0 million tonnes per annum (MTPA)
capacity by the end of the year. The new silver refinery of 350 TPA is
scheduled to be commissioned in Q3FY12.
V a l u a t i o n
At the CMP of | 121, after adjusting for LME volatility in our estimates, the
stock is trading at FY12E EV/EBITDA of 5.2x and FY13E EV/EBITDA of
4.1x. We expect HZL to register growth of 10.4% and 9.9% CAGR in
topline and bottomline, respectively, during FY11-FY13E. We have valued
HZL at FY13E EV/EBITDA of 5.0x to arrive at our target price of | 135 and
assigned a BUY rating to the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
P e r f o r m a n c e s l i g h t l y b e l o w e x p e c t a t i o n …
Hindustan Zinc’s (HZL) Q2FY12 numbers were slightly below our
estimates, primarily due to muted sales volumes. While the refined zinc
sales volumes registered a decline of ~4% QoQ, refined lead sales
volumes were flat on a sequential basis. Net sales came in at | 2593.5
crore (I-Direct estimate: | 2853.5 crore) registering de-growth of ~8%
QoQ. EBITDA margins have improved by 10 bps QoQ and 450 bps YoY.
Net profit jumped ~41.7% YoY to | 1344.7 crore (I-Direct estimate: |
1414.3 crore), mainly driven by a sharp increase in other income (up
~110% YoY and ~9% QoQ).
ƒ Lower sales volumes lead to a subdued topline on a QoQ basis
In Q2FY12, HZL reported ~8% decline in topline on a QoQ basis on
account of muted sales volumes. During the quarter under review,
refined zinc sales volumes stood at 184161 tonnes registering a
decline of ~4% QoQ while refined lead sales volumes remained flat
at 14,686 tonnes.
ƒ Expansion projects
The 1,00,000 tonnes per annum (TPA) lead smelter at Dariba was
commissioned during the quarter, taking the total refining capacity of
lead to ~1,85,000 TPA. The ramp-up of the Sindesar Khurd mine is
on track to achieve its targeted 2.0 million tonnes per annum (MTPA)
capacity by the end of the year. The new silver refinery of 350 TPA is
scheduled to be commissioned in Q3FY12.
V a l u a t i o n
At the CMP of | 121, after adjusting for LME volatility in our estimates, the
stock is trading at FY12E EV/EBITDA of 5.2x and FY13E EV/EBITDA of
4.1x. We expect HZL to register growth of 10.4% and 9.9% CAGR in
topline and bottomline, respectively, during FY11-FY13E. We have valued
HZL at FY13E EV/EBITDA of 5.0x to arrive at our target price of | 135 and
assigned a BUY rating to the stock.
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