MOSL: HINDUSTAN ZINC (Neutral)-In-line-LME and volume gains partly offset by cost increase-Zinc outlook bullish
Hindustan Zinc: In-line; LME and volume gains partly offset by cost increase; Zinc outlook bullish, but priced in
(HZ IN, Mkt Cap USD20.0b, CMP INR309, TP INR354, 14% Upside, Neutral)
HZL’s 3QFY18 EBITDA increased 17% YoY/7% QoQ to INR32.4b (in-line), driven by higher LME and volumes, partly offset by an increase in cost. Other income declined 39% QoQ to INR2.9b due to lower surplus cash and the market-to-market impact of an increase in the G-Sec rate. PAT declined 4% YoY/12% QoQ to INR22.3b (est. of INR23.9b) due to a higher tax rate.
- Mine metal production increased 10% QoQ (-13% YoY, strong base) to 240kt. Zinc production rose 7% QoQ (-18% YoY) to 194kt, while lead production increased 21% QoQ/18% YoY to 46kt. Silver production growth was slower at 4% QoQ to 132t on WIP build-up.
- Reported CoP (ex-royalty) increased, on expected lines, by USD38/t QoQ to USD1,022/t due to higher coke and coal cost, and grade mix.
- CoP is guided at USD950-975/t for FY18, implying some moderation in 4Q, driven by better grade and coal linkage.
- RAM underground and SK mines crossed their rated output of 2mt/4.5mt during the quarter. Production through shafts at both the mines is on track to start from 3QFY19. Civil work at the Fumer project is 70% complete, with the project on track for commissioning by mid-FY19.
Hindustan Zinc is engaged in the operation of mining, smelting and refining zinc and lead as their principal products and; silver and cadnium as by products. Co.'s resources and reserves total 365.1 tonnes throughout India. Co. also implements several projects to reduce energy and water consumption through wind power farms. The zinc, lead and silver metals are sold throughout India as well as the Middle East and Asia.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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