Hindustan Zinc - 4QFY2013 results - Angel Broking

Hindustan Zinc's (HZL) reported better than expected 4QFY2013 results, both on top-line and profitability front. HZL's net revenue increased by 24.5% yoy to Rs. 3,850cr (above our estimate of Rs. 3,091cr) mainly due to increased sales volumes of silver and higher rupee realizations. Zinc production volumes however declined 4.0% yoy to 182kt but silver production volumes grew 33.0% yoy to 117kt due to higher production from Sindesur Khurd mine and new Dariba lead and silver capacities. EBITDA margin contracted by 133bp yoy to 55.0% mainly on account of 8.0% yoy increase in cost of production to Rs. 44,901/tonne. Cost of production increased due to higher strip ratio at Rampura Agucha and lower acid credits, partially offset by lower power costs. Mining royalty as a percentage to sales declined to 6.3% compared to 7.4% in 4QFY2012 and other operating income also increased by 40.7% yoy to Rs. 58cr. Hence, EBITDA increased by 27.5% yoy to Rs. 2,116cr. Other income rose by 8.1% yoy to Rs. 412cr while the depreciation was down by 27.0% yoy to Rs. 122cr and tax rate was also much lower at 8.9% in 4QFY2013 (24.1% in 4QFY2012). There was an exceptional item of VRS scheme of Rs. 18cr and consequently, adjusted net profit grew by 53.6% yoy to Rs. 2,183cr (much above our estimate of Rs. 1,663cr).

We maintain our Buy rating on the stock with a target price of Rs. 140.

Source : Equity Bulls

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