Hindustan Zinc - Q1FY14 Result Update - Kotak

Mixed operating performance - Earnings outlook remains stable. Retain BUY

Mined metal production run rate remains good but integrated metal production marginally hit due to planned shutdown leading to marginally below expected EBITDA. Production outlook remains positive.

- Q1 mined metal concentrate production maintained good run-rate, increasing by 27.4% Y/Y to 237.8kt. However, metal production was relatively little subdued due to planned shutdown during the quarter. HZL delivered 173kt (up 10%Y/Y) of integrated zinc production, 29.1kt (flattish Y/Y) of integrated lead production and 77t (up 8.5% Y/Y) of integrated silver production.

- MIC inventory at end of Q1 stood at ~38kt; zinc MIC at ~29.5kt and lead MIC at ~8.5kt.

- Q1 other income of Rs6.2bn included Rs850mn of MTM gains on liquid debt investments. Cash and equivalents increased by Rs8.86bn Q/Q to Rs223.65bn.

- With the progress of mining expansions reasonably satisfactory, continuous increase in output from various mines will result in higher integrated (relatively much higher margins) metal volumes ahead in FY14/15.

Source : Equity Bulls

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