Hindustan Zinc - Q1FY14 Result Review - Angel Broking

Hindustan Zinc's (HZL) 1QFY2014 results were in line with our expectations. HZL's net revenue increased by 8.4% yoy to Rs. 2,939cr (in line with our estimate of Rs. 2,916cr) mainly due to increased sales volumes of zinc and silver. Refined zinc production volumes increased 10.0% yoy to 173kt and refined silver production volumes grew 31.0% yoy to 96kt due to higher production from Sindesur Khurd mine and new Dariba lead and silver capacities.

EBITDA margin contracted by 153bp yoy to 51.1% mainly on account of 2.0% yoy increase in cost of production to Rs. 46,765/tonne. Cost of production increased primarily due to lower sulphuric acid credits and higher excavation costs, partially offset by lower coal price, lower specific coal consumption and benefits of higher volume. Mining royalty as a percentage to sales increased to 8.6% compared to 7.5% in 1QFY2013 while other operating income also increased by 27.7% yoy to Rs. 45cr. Hence, EBITDA increased by 5.2% yoy to Rs. 1,503cr. Adjusted net profit grew by 5.0% yoy to Rs. 1,661cr (in line with our estimate of Rs. 1,617cr).

We maintain our Buy rating on the stock while keep our target price under review.

Source : Equity Bulls

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