Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Strong operating performance; reiterate positive view
HZ posted a strong operating performance for Q1FY12, with EBITDA at Rs 15.9bn
(+56% YoY, -19% QoQ). EBITDA/PAT beat our expectations by 5%/12% largely
on (1) higher-than-expected zinc volumes, (2) higher silver realisations and (3) a
sharp rise in other income to Rs 3.5bn on account of increased yield on investments
and a higher investible surplus. We reiterate our positive view on HZ as we expect
strong growth over the next two years led by ramp-up in zinc-lead and silver
production. In our view, the high EBITDA-to-FCF conversion along with a strong
balance sheet enhances HZ’s strong footing. Maintain BUY with a TP of Rs 180/sh.
Strong Q1FY12 performance led by higher volumes: HZ reported Q1FY12 net
revenues/EBITDA/PAT of Rs 28.2bn/ Rs 15.9bn/ Rs 14.9bn—ahead of our estimates
by 8%/5%/12%. On a YoY basis, EBITDA grew 56% largely due to (1) higher zinc
sales at 191kt (+17% YoY) as the company benefitted from full ramp-up of the new
210ktpa smelter, (2) a 10%/24% increase in zinc/lead realisations and (3) higher
contribution from the silver business.
Costs rise on higher coal prices: HZ’s Q1FY12 zinc metal costs increased to US$
874/t from US$ 784/t in Q4FY11 due to (1) higher coal costs on account of price
hikes taken by Coal India and higher landed cost of imported coal and (2) increase in
stripping costs. We expect HZ’s cost of production to remain at current levels.
Silver business, commissioning of new lead smelter–the next growth drivers:
Commissioning of the new 100ktpa lead smelter in Dariba has begun and the
management expects metal production by mid-Q2FY12. In our view, this will pave
the way for silver capacity ramp-up as it will feed the new 350t silver refinery.
Strong silver play, increasing volumes: HZ is a strong silver play as it expands
silver capacity to 500t by FY13-end, backed by commissioning of the 100ktpa lead
smelter and the complete ramp-up of the silver-rich Sindesar Kurd mines. We
maintain our BUY rating on HZ with a target price of Rs 180/share (valued at 6x
FY13E EBITDA) and Rs 64/share of net cash (as at FY13-end).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Strong operating performance; reiterate positive view
HZ posted a strong operating performance for Q1FY12, with EBITDA at Rs 15.9bn
(+56% YoY, -19% QoQ). EBITDA/PAT beat our expectations by 5%/12% largely
on (1) higher-than-expected zinc volumes, (2) higher silver realisations and (3) a
sharp rise in other income to Rs 3.5bn on account of increased yield on investments
and a higher investible surplus. We reiterate our positive view on HZ as we expect
strong growth over the next two years led by ramp-up in zinc-lead and silver
production. In our view, the high EBITDA-to-FCF conversion along with a strong
balance sheet enhances HZ’s strong footing. Maintain BUY with a TP of Rs 180/sh.
Strong Q1FY12 performance led by higher volumes: HZ reported Q1FY12 net
revenues/EBITDA/PAT of Rs 28.2bn/ Rs 15.9bn/ Rs 14.9bn—ahead of our estimates
by 8%/5%/12%. On a YoY basis, EBITDA grew 56% largely due to (1) higher zinc
sales at 191kt (+17% YoY) as the company benefitted from full ramp-up of the new
210ktpa smelter, (2) a 10%/24% increase in zinc/lead realisations and (3) higher
contribution from the silver business.
Costs rise on higher coal prices: HZ’s Q1FY12 zinc metal costs increased to US$
874/t from US$ 784/t in Q4FY11 due to (1) higher coal costs on account of price
hikes taken by Coal India and higher landed cost of imported coal and (2) increase in
stripping costs. We expect HZ’s cost of production to remain at current levels.
Silver business, commissioning of new lead smelter–the next growth drivers:
Commissioning of the new 100ktpa lead smelter in Dariba has begun and the
management expects metal production by mid-Q2FY12. In our view, this will pave
the way for silver capacity ramp-up as it will feed the new 350t silver refinery.
Strong silver play, increasing volumes: HZ is a strong silver play as it expands
silver capacity to 500t by FY13-end, backed by commissioning of the 100ktpa lead
smelter and the complete ramp-up of the silver-rich Sindesar Kurd mines. We
maintain our BUY rating on HZ with a target price of Rs 180/share (valued at 6x
FY13E EBITDA) and Rs 64/share of net cash (as at FY13-end).
No comments:
Post a Comment