Dear All,
Forwarding you the Result Update on Hindustan Zinc for 4QFY2011 with a Neutral recommendation.
For 4QFY2011, Hindustan Zinc’s (HZL) net revenue at `3,197cr was substantially higher than our estimate of `2,724cr. Net profit at `1,771cr was also above our estimate of `1,368cr. The deviation was mainly due to higher-than-expected zinc, lead and silver sales volume and other income.
Impressive performance in 4QFY2011: HZL’s net revenue grew by 28.0% yoy and 22.9% qoq to `3,197cr on account of higher sales volume and realisation. Although lead volumes fell by 11.3% yoy to 16kt, zinc volumes grew by 28.6% yoy to 194kt (up 32.6% and 9.0%, respectively, on a sequential basis). Silver sales volume increased by 4.5% yoy and 50.1% qoq to 44,325kg, while zinc and lead concentrate sales stood at 48,000dmt. Silver realisation increased by 89.4% yoy and 24.9% qoq to `49,197/kg. Thus, led by strong top-line growth, EBITDA grew by 30.6% qoq and 27.1% yoy to `1,969cr, as margins expanded by 363bp qoq to 61.6%, though flat on a yoy basis. Further, other income grew by 125% yoy and 46.1% qoq to `302cr and tax rate came in lower at 16.9%, which resulted in net profit growing by 43.0% yoy and 37.4% qoq to `1,771cr.
Outlook and valuation: Currently, the stock is trading at 6.5x FY2012E and 5.2x FY2013E EV/EBITDA. HZL is expected to benefit from the expansion of zinc-lead smelting capacity and increased silver production. Further, HZL had a huge cash balance of `14,965cr as of March 31, 2011 (`35 per share). We maintain our Neutral rating on the stock.
Kindly click on the following link to view the Report.
If you have any further queries, feel free to call us on 022 39357600, Extn: 6864 / 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6864,6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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