Hindustan Zinc - 2QFY2012, review:: Angel Broking

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Hindustan Zinc
For 2QFY2012, Hindustan Zinc’s (HZL) net revenue increased by 19.9% yoy to
`2,593cr (in-line with our estimate of `2,643cr) 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. 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 net profit
growth of 41.7% yoy to `1,345cr despite depreciation increasing by 25.6% yoy
to `146cr and higher tax rate at 19.5%. Excluding exceptional items (`24cr in
2QFY2012 and `21cr in 2QFY2011), adjusted net profit grew by 41.1% yoy
to `1,369cr (higher than our estimate of `1,265cr). HZL’s cash and
equivalents stood at `16,296cr at the end of 2QFY2012
(cash per share - `38.6). We continue to maintain our Buy view on the stock;
our target price is under review.