Buy Hindustan Zinc between Rs 185.40 to Rs 179. Stoploss at Rs 172 :HDFC Sec

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Hindustan Zinc - Mined Metal Production Guidance Retained; Result Update Q3FY15 :: Edelweiss

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Hindustan Zinc: Higher mining volumes help deliver a strong quarter :: Kotak Securities

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Higher mining volumes help deliver a strong quarter. Hindustan Zinc’s EBITDA
grew 5% qoq on the back of strong mined volumes. HZ is deepening Rampura Agucha
open cast mine by additional 50 meters, which hedges the risk of any potential
production loss during the transition to underground mining. We expect HZ to benefit
from improving zinc fundamentals due to constrained global mine supplies. We
incorporate our economist’s revised Fx rate and increase EBITDA estimate by 8-13% for
FY2015-17E. Our fair value increases to `205 from `190 earlier. The stock is
inexpensive and trades at 3.6X FY2016E EBITDA; upgrade to BUY (from ADD earlier).

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Margin beats estimate; other income surprises • Hindustan Zinc :: ICICI Securities

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Buy Bombay Dyeing and Hindustan Zinc: HDFC Securities - Technicals

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Hindustan Zinc BUY-- Huge reserve base; provides strong earnings visibility :: ICICI Securities, PDF link

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Hind Zinc": Rating: Buy; Target Price: Rs160; CMP: Rs130; Centrum

Rating: Buy; Target Price: Rs160; CMP: Rs130; Upside: 23%





Volume disappoints, guidance cut again; maintain Buy



We remain positive on Hindustan Zinc (HZL) despite subdued Q3 results
and further cut in metal-in-concentrate (MIC) volume guidance to 0.9MT
for FY14E. We cut our metal volume estimates to factor lower mining
output but see limited adverse impact on EBITDA estimates (cut by ~3%
for FY15E) due to better LME prices and strong metal premiums coupled
with weak rupee mitigating the impact of lower volumes and increased
costs. Q3 results were lower than expectations operationally due to
sharp drop in lead & silver volumes as MIC production fell 5.6% YoY to
220kt. Risk reward remains favourable with current valuations at 3.2x
FY15E EV/EBITDA despite strong free cash flow. Maintain Buy.

$ Lower MIC output results in sharp fall in lead & silver volumes: MIC
production fell by 5.6% YoY to 220kt due to slow ramp up in
underground production at Rampura Agucha and Kayar mines. Zinc sales
volumes stood at 1.99 lakh tonne, up by ~17% YoY as integrated
production saw a jump of ~14.6%. Lead and silver sales volumes
suffered due to lower MIC and were down YoY by 20% & 30% respectively.
HZL has indicated that output from Rampura Agucha is expected to be
down 10% YoY in FY14E (with underground mining share of 10% vs 20%
expected earlier).

$ Margins supported by strong metal premiums and weak rupee: EBITDA
stood at Rs18.2bn (vs. est. Rs19.2bn) with margins at 52.9% (higher
than est. 52.5%) on the back of strong premiums on zinc & lead
(~US$250/t) and better realizations due to a weaker rupee mitigating
the negative impact of lower volumes and higher CoP. Other income was
lower due to the continuation of MTM loss (lower QoQ but is expected
to reverse over the year).

$ Guidance lowered, earnings revised downwards marginally: HZL reduced
its mined metal production guidance to 900kt and integrated silver
output to 290t. The reduction in guidance (since Q1) was surprisingly
high at 10% for mined metal output and ~20% for integrated silver and
the company indicated slow ramp up in underground mine production as
the main reason for this. We reduce our mined metal production
estimate to 900kt/940kt in FY14E/15E and cut our integrated metal
volumes for lead and silver. However, strong metal premiums, better
LME prices and weak rupee helped mitigate the adverse impact on EBITDA
and as a result we revise EBITDA estimates by 0.9%/-3.2% for
FY14E/15E.

$ Valuation & key risks:  We continue to like HZL for its strong
fundamentals with volume growth led by mining expansion, lower overall
cost structure, structurally positive pricing scenario for zinc & lead
globally due to mining supply cuts and attractive valuations with
favorable risk-reward. Strong cash pile, high free cash flow
generation and low valuations at 3.2x FY15E EV/EBITDA, further
buttress our positive view on the stock. We value the stock at 4.5x
Dec’15E EV/EBITDA to arrive at our target of Rs160. Maintain Buy. Key
risks to our call are lower volumes and sharp fall in LME prices or
reversal in rupee.



Thanks & Regards

--

Hindustan Zinc:: Centrum

Superior operational show; maintain Buy
We maintain buy on Hindustan Zinc (HZL) with a target price of Rs161 on the back
of i)strong metal premiums and higher integrated output coupled with weak rupee
aiding realizations ii)marginal upward revision in EBITDA estimates for FY14E/15E
by 2.2%/3.4%, and iii) favourable risk-reward. Q2 results were better than
expectations operationally with margins at 52.9%, driven mainly by higher
integrated volumes, strong metal premiums, lower costs and a weak rupee.
Despite reduction in volume guidance to 950kt MIC zinc-lead production in FY14E,
we don’t see material change in our volume estimates due to strong H1. We prefer
HZL as our top pick in the non-ferrous group on strong fundamentals and
undemanding valuations.

Technicals: Bank of India, Carborundum, Hindustan Copper, Hindustan Zinc, Reliance Industrial Infrastructure, Deepak Fertilizers :: Business Line

Outlook: Amtek Auto, Wockhardt, Hindustan Zinc, L T Finance, Everest Industries, EID Parry :: Business Line :: Business Line

Technicals: Amtek Auto, Wockhardt, Hindustan Zinc, L T Finance, Everest Industries, EID Parry :: Business Line

Hindustan Zinc: Back to its Core : IIFL,

Back to its Core
HZL in its FY13 annual report has chalked out plans for its next phase of
expansion. HZL’s growth in the near term would come from raising its mined
metal output from the current capacity of 0.87mtpa to 1.2mtpa over the next
six years. The company continues to remain focussed on increasing in
reserves and resources, thereby keeping the mine life above 25 years at
current capacity. HZL has guided for 1mn tons of mined metal production for
FY14 on the back of higher contribution from Zawar mines. The company has
managed to receive all the approvals for the operations of Zawar and expects
it to increase production from 0.2mtpa to 1.2mtpa in FY14. Costs are
expected to improve as coal costs decrease and mined metal output
increases. HZL continues to be our top bet amongst the non‐ferrous
companies. We maintain our BUY recommendation on the stock with a
revised 9‐month price target of Rs130.
Mined metal output to jump in FY14E
HZL’s mined metal output was impacted in H1 FY13 due to the process of
transforming its largest mine, Rampura Agucha, from open cast to
underground. Output in H1 FY13 was lower by 5.3% yoy and was in line with
the management guidance of weak output in the first half. However, it
managed to ramp up its output in H2 FY13 by 14.1% yoy, offsetting the
decline in volumes in the first half. The management has now guided for
mined metal output to increase from 0.87mn tons in FY13 to 1mtpa in FY14
on the back of higher contribution from Zawar and Sindesar Khurd mines. We
believe that the guidance given by the management is aggressive and expect
output to jump to 0.92mn tons in FY14 and 0.95mn tons in FY15.
Cash costs to decline marginally in FY14E
HZL’s cost of production in Rupee terms was higher by 13.7% yoy in FY13 due
to purchase of external concentrate, increase in diesel prices and lower strip
ratio. We believe that costs would decline in FY14 on account of increase in
captive mined metal, lower coal costs and improvement in strip ratios. Power
costs per ton declined in FY13 and are expected to decline further in FY14 due
to lower international coal prices. Raw material cost too is expected to
decline 25% yoy due to lower external purchase of concentrate.

Hindustan Zinc Delivers quality earnings; Return potential intact ::Prabhudas Lilladher,

Hindustan Zinc reported Q4FY13 earnings ahead of our expectation on the back of
better-than-expected concentrated sales volumes. Given the strong likelihood of
Govt. stake sale at a much higher price and beaten down valuations (EV/EBITDA:3.6x
FY14E), we reiterate our “BUY” rating with TP of Rs150, EV/EBITDA of 4.5x FY15E.
! Strong concentrated sales leads the beat: Thanks to higher-than-expected
concentrated sales (61kt v/s PLe: 30kt), revenues grew ahead of our expectation
at Rs38.5bn (PLe: Rs37.3bn), up 22.6% QoQ (24.5% YoY). Higher concentrated
sales compensated lower-than-expected refined metal (215kt v/s PLe: 220kt)
and silver (107t v/s PLe: 119t) volumes. Led by higher concentrated sales,
EBITDA grew ahead of our expectation at Rs20.6bn (PLe: Rs19.4bn); up 46%
QoQ (27% YoY). Gap further widened on PAT level on account of lower tax rate
(9% v/s PLe: 13%). Adj. PAT grew ~39.5% QoQ (53.7% YoY) at Rs21.8bn (PLe:
Rs20.1bn).
! Key takeaways from earnings con‐call: 1) Zawar (capacity of 1.2mtpa) secured
all requisite approvals to resume production 2) Management guided 15%
growth in mined metal production in FY14 at 1m tonnes on the back of
increased production in Zawar, SK and Kayar mines 3) Integrated saleable silver
production (net of own consumption) is guided to grow 25% YoY at 360t. 4) Net
addition of 16m tonnes to Reserves and Resources (R&R) after depletion of
8.6m tonnes in FY13. Total R&R stood at 348m tonnes at the end of FY14 with a
mine life of 25+ years. 5) Cost of production guided to remain stable in FY14 6)
Tax rate is guided to be in mid-teens in FY14.
! Valuation and Outlook: We remain positive on the stock given the play on
attractive valuations and quality assets, coupled with strong likelihood of Govt’s
stake sale at a significant premium. We maintain our “BUY” rating with TP of
Rs150, EV/EBITDA of 4.5x FY15E.

Hindustan Zinc Ltd - Buy Q4FY13 Result Update:: Centrum

Mining expansions to provide volume fillip
Hindustan Zinc’s (HZL) Q4FY13 earnings were well ahead of our estimates on the back of higher concentrate sales, better integrated metal volumes and lower tax rate. EBITDA stood at ~Rs21.2bn with higher than expected margin of 55%, driven by strong metal-in-concentrate (MIC) production (up 16.6% YoY at 260kt) and zinc concentrate sales of 61kt. The company gave a strong guidance of 1 MT MIC zinc-lead production in FY14E, up 15% from 870 kt in FY13. We have lowered our EBITDA estimates on account of a cut in realization assumptions. Maintain Buy on strong fundamentals and cheap valuations (currently trading at 3.5x FY14E EV/EBITDA).

Higher concentrate sales surprises positively along with integrated metal volumes: Integrated volume share stood at 100% in zinc, 90% in lead and ~85% in silver and was a positive surprise. Zinc volumes remained at 1.8 lakh tonne, lower by ~4% YoY but surplus zinc concentrate sales stood at 61kt leading to smart growth in zinc sales. Lead volumes stood at 32.5kt, up QoQ by 8.3%. Silver volumes stood at 107 tonne, up by ~40% YoY. MIC production went up smartly to 260kt, up ~12% QoQ and 16.6% YoY.

Strong margins: EBITDA margin improved by 140bps YoY and stood at 55% on the back of surplus concentrate sales and higher integrated production in zinc, lead and silver. We however do not expect margins to sustain at Q4 level but settle down lower on account of lower realizations going ahead.

QUERY CORNER - Hindustan Zinc, Sterlite Industries, Titan, Yes Bank, JK Bank, Moser Baer :: Business Line

 

Hindustan Zinc :: ::Nomura research

Earnings momentum intact
Volumes to pick up from 2H,
strong silver ramp-up and cost
optimisation to drive earnings

HZL - Q2FY13 Result Update - Centrum

Q2FY13 Result Update

Hindustan Zinc Ltd

Buy

Target Price: Rs159

CMP: Rs135

Upside: 17.7%

Higher mining output to drive growth ahead

Hindustan Zinc’s (HZL) Q2FY13 PAT was in line with our expectations at ~Rs15.4bn and was aided by lower tax rate of 15% and higher other income of Rs5.4bn (up by ~40% YoY). EBITDA stood at ~Rs14.4bn with lower margin of 51.1%, down by 160bps QoQ mainly on account of lower mining output, higher costs and depressed LME realizations. The company maintained its guidance on increased mine output in H2FY13E with volume growth in lead and silver divisions and strongly asserted flat cost of production (COP) for FY13E, implying significantly lower COP in H2FY13E. We have lowered our total zinc & lead volume estimates for FY13E/14E by 4.5%/3.2%. We revise upwards our EV/EBITDA valuation multiple for FY14E to 6x and revise our target upwards to Rs159. Maintain Buy.

Buy Hindustan Zinc: Other income and lower tax boost profits ::Centrum

Hindustan Zinc

Other income and lower tax boost profits
Hindustan Zinc’s (HZL) Q1FY13 PAT was boosted by lower tax rate of 13% and higher
other income of Rs5.7bn (up by ~62% YoY). EBITDA stood at ~Rs14.3bn (against our
expectation of Rs14.6bn) with margin at 52.7%, lower by 90bps QoQ as mine output
was lower sequentially and LME realizations remained depressed. HZL benefitted from
Rs1.2bn MTM gain in other income and various tax optimization schemes helped lower
the tax rate to 13%. Company maintained its guidance on increased mine output in
H2FY13E, volume growth in lead and silver divisions and hinted at possible
announcement of new refined capacities in future based on successful mining
expansions and related feasibility studies. We revise our FY14E estimates on account of
higher rupee realizations, higher other income and lower tax rate. Maintain Buy.
Lead and silver volumes increase as expected: Lead and silver sales remained strong
and went up YoY by ~97% and ~76% respectively as both the lead smelter and silver
refinery continued to stabilise and mine production and silver grade from SK mine
improved. Zinc volumes remained subdued with lower zinc mine output and stood at
1.61 lakh tonne, lower by ~16% YoY.
Margin drops: EBITDA dropped by ~10% QoQ to Rs14.3bn and EBITDA margin stood at
52.7% as lower overall mine output resulted in lower integrated production in zinc, lead
and silver. Also, pressure on LME realizations resulted in sharp margin drop YoY.

PL INDIA: Hindustan Zinc - Beaten down valuations and strong FCF sets the positive tone - Accumulate

PL INDIA 

Hindustan Zinc                   Accumulate             

Visit Update - Beaten down valuations and strong FCF sets the positive tone

We met the top management of Hindustan Zinc (HZL) to understand the status of underground (UG) projects in Rampura Agucha (RA) and Sindesar Khurd (SK) mines, guidance on capex and volumes. Following were the key highlights of the interaction:

Hindustan Zinc:Strong Focus On Mining, Exploration : Nirmal Bang,

Strong Focus On Mining, Exploration We took part in the visit organised by Hindustan Zinc (HZL) covering its Rampura Agucha mine (RAM), Sindesar Khurd mine (SKM), Chanderiya smelting complex and Dariba smelting complex, all located in Rajasthan. The company largely focuses on exploration and mining activities, but most of the benefits would accrue from FY14-15. In the interim, HZL is looking at higher lead and silver output and cost efficiency as major profit drivers. We retain our Buy rating on HZL with a TP of Rs151, which is 20% above the CMP.