Buy Hindustan Zinc Ltd - Emkay

Reco: BUY
CMP: Rs 119
Target Price: Rs 140

Lower tax and other income aid bottom-line

- Q1FY13 PAT at Rs 15.8 bn above estimates primarily due to the effect of lower tax rate at 13% (24% in Q4FY12) and higher other income (up 51% QoQ, 61% YoY) of Rs 5.74 bn

- EBITDA at Rs 14.3 bn, as estimated, down 14% QoQ. EBITDA margin at 52% down 394 bps YoY. Zinc COP (without royalty) at Rs 45,759 ($844) vs Rs 39,117 ($874) in corresponding qtr

- Revenue in line with estimates at Rs 27.5 bn, down 12% QoQ and 4% YoY. Lower LME was offset by weak INR. Zinc sales volume (160 kt) fell 17% on both YoY/ QoQ

- Cash balance of Rs 19.4bn translates to Rs 46/share. Believe exploration success to be the next trigger. Value the stock at 5XFY14 EV/ EBITDA; Maintain BUY with TP of Rs 140.

Source : Equity Bulls

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