Hindustan Zinc Weak INR to offset low LME; Lead biz need to catch up :Emkay,

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Hindustan Zinc

Weak INR to offset low LME; Lead biz need to catch up

BUY

CMP: Rs 121                                       Target Price: Rs 159

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n     Revenue at Rs 26.4 bn up 19.8% on YoY basis, but down 7% QoQ due to marginal decline in refined zinc and lead sales, lower LMEs QoQ and no concentrate sales

n     EBITDA at Rs 14.7 bn was up 30% YoY while down 8% QoQ. EBITDA margin stood at 55.6% up 443 bps YoY basis but down 38 bp QoQ basis. Zinc CoP fell to US$847/ tonne

n     APAT at Rs 13.7 bn, broadly in line with revised estimates was up 42% YoY.  The shortfall on account of lower lead sales was offset by higher other income Rs 3.9 bn (up 110%)  

n     We refine our FY12E and FY13E assumptions on account of LME, Exchange rate and volumes. Due to global sentiment lowered target to Rs 159 (6xFY13 EV/ EBITDA); Retain Buy