Q4FY21 Result Update - Hindustan Zinc - ICICI Direct

Hindustan Zinc (HZL) reported a healthy Q4FY21 performance, primarily on account of higher-than-expected sales volume. For the quarter, zinc sales volumes came in at ~198000 tonnes (up 14% YoY, 9% QoQ, higher than our estimate: 191813 tonnes), lead sales volume came in at ~62000 tonnes (up 29% YoY, 17% QoQ, higher than our estimate: 54575 tonnes) while silver sales volume came in at ~203000 kg (up 41% YoY, 11% QoQ, higher than our estimate: 187500 kg). Topline came in at Rs. 6947 crore (up 58% YoY, 15% QoQ), higher than our estimate of Rs. 6435 crore. EBITDA came in at Rs. 3875 crore (up 97% YoY, 19% QoQ), higher than our estimate of Rs. 3594 crore. EBITDA margin came in at 55.8%, in line with our estimate (EBITDA margin of 54.2% in Q3FY21, 44.7% in Q4FY20). HZL's zinc cost of production (CoP) before royalty during quarter was at US$945/tonne per tonne (Rs. 68969/tonne), down 5%YoY both in rupee, US dollar terms and flat QoQ (down 1% in rupee terms). Ensuing PAT for Q4FY21 was at Rs. 2481 crore (up 13% QoQ, 85% YoY), higher than our estimate of Rs. 2353 crore.

Valuation & Outlook

Over the last few months, healthy traction was witnessed in zinc prices on the LME. The uptick in zinc prices augurs well for HZL. Going forward, we model EBITDA margin of 54.2% in FY22E and 55.2% in FY23E (FY21 EBITDA margin was at 51.6%). We value the stock at 7x FY23E EV/EBITDA (upward revised from 6x earlier) and arrive at a target price of Rs. 340 (earlier target price of Rs. 290), maintaining our HOLD rating on the stock.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_HindZinc_Q4FY21.pdf

Shares of HINDUSTAN ZINC LTD. was last trading in BSE at Rs.305.3 as compared to the previous close of Rs. 307.1. The total number of shares traded during the day was 100901 in over 2511 trades.

The stock hit an intraday high of Rs. 312.25 and intraday low of 301.95. The net turnover during the day was Rs. 31044789.

Source : Equity Bulls

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