Hindustan Zinc - March 2013 Results Preview - Motilal Oswal

- Net sales to increase 9% QoQ on higher LME prices and volumes: We expect net sales to increase 9% QoQ (grow 10% YoY) to INR34.5b on higher sales volume and realization. LME zinc and lead prices have increased 5% QoQ each. We expect mine metal production to remain flat QoQ at 233kt, while integrated lead/zinc production is likely to increase 18% QoQ to 225kt.

- EBITDA to increase 23% QoQ: We estimate EBITDA to increase 23% QoQ to INR18.4b (+11% YoY) on higher sales volume and realization. Integrated silver production is expected to increase 39% QoQ to 86 tons.

- Maintain Buy: HZL has guided for 1mt of MIC production in FY14 along with 380-400 tons of silver. We model 889kt of MIC production and 392tons of integrated silver production. We expect EBITDA to increase 10% YoY to INR68.2b on increased volumes. The stock trades at 7.5x FY15E EPS and at an EV of 2.5x FY15E EBITDA. Maintain Buy.

Source : Equity Bulls

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