NRI Business Associate
With completion of all expansion projects, Hindustan Zinc is well placed to witness volume growth tailwinds over FY22-23E.
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Hindustan ZINC
- With completion of all expansion projects, HZ is well placed to witness volume growth tailwinds over FY22-23E. HZ has guided for metal volumes at 1.02-1.05 mn tons and silver production at 720 tons for FY2022.
- HZ’s 4QFY21 revenues increased to Rs. 6,947 cr (+58% yoy, +15% qoq) led by higher metal volumes and zinc-silver prices. Volumes increased by 14%/29%/41% yoy for zinc/lead/silver.
- Zinc – adjusted CoP (Cost of Production) stood at US$945/ton (-5% yoy, flat qoq), declined yoy on higher volumes and better bi-product credits. EBITDA (Earnings Before Interest Tax Depreciation and Amortization) at Rs. 3,875 cr increased 97% yoy mainly led by 56%/29% yoy higher silver/zinc prices and lower zinc CoP.
- We expect the zinc market fundamentals to remain strong in FY22E led by supply-side restrictions in China on safety/environment protection, a strong sequential demand recovery in world ex-China coupled with lagging supply.
- As on March 31, 2021, the net cash and cash equivalents increased to ~Rs. 15100 cr (+38% qoq) on strong operational cash flows and release of working capital.
Hindustan Zinc: BUY
Dated: 10 th May 2021
CMP: Rs.310
Fair Value: Rs.370
Potential Upside: 19.4%Market Cap: Rs.1,30,626 Cr
Time Frame: 12 months
Note: The above is a brief note on the company, based on the inputs of KIE research report dated 27 th April 2021, which is available on our website at: https://www.kotaksecurities.com/ksweb/ResearchCall/Fundamental . Disclaimer: http://bit.ly/2n5AxIE
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please refer the Risk Disclosure Document issued by SEBI and go through the Rights and Obligations and Do's and Dont's issued by Stock Exchanges and Depositories before trading on the Stock Exchanges .
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Authorised Person
Lakshit Financial is Authorized Person of Kotak Securities Limited in cash segments of BSE & NSE and NSE F&O segments with NSE. Lakshit Financial registration number: BSE CASH AP0106730124228 | NSE CASH AP029177621 | NSE F&O AP029177621. Lakshit Financial Registered Office: ASM 7, Ashwin Sector, Mumbai Agra Highway, CIDCO, Nasik 422009, Maharashtra, India. Kotak Securities Limited. Registered Office: 27 BKC, C 27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400051. CIN: U99999MH1994PLC134051. Correspondence Address: Infinity IT Park, Bldg. No 21, Opp. Film City Road, A K Vaidya Marg, Malad (East), Mumbai 400097. SEBI Registration No. INZ000200137 (Member of NSE, BSE, MSE, MCX & NCDEX). Member Id: NSE-08081; BSE-673; MSE-1024; MCX-56285; NCDEX-1262. AMFI ARN 0164, PMS INP000000258 and Research Analyst INH000000586. NSDL/CDSL: IN-DP-NSDL-23-97.
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please refer the Risk Disclosure Document issued by SEBI and go through the Rights and Obligations and Do's and Dont's issued by Stock Exchanges and Depositories before trading on the Stock Exchanges.
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