Hindustan Zinc (HZ IN, INR 125, Buy)
We recently met the Hindustan Zinc (HZL) management. Key takeaways are: (a) underground mining likely to commence by Q2-Q3FY13 at Rampura Agucha with no major cost increase; (b) FY13 capex guidance of INR15bn-18bn remains intact; and (c) effective tax rate to decline. We believe HZL will not be able to make up for lower volumes in H1FY13 (in contrast to its guidance) and cut our FY13E zinc volume 6.5%, leading to 5.6% cut in our FY13E EBITDA. While our FY14E EBITDA and TP are broadly unchanged, we downgrade our rating from ‘Sector Outperformer’ to ’Sector Performer’ due to lower volumes in FY13. Maintain ‘BUY’.