MOSL: HINDUSTAN ZINC (Neutral)-Below estimate due to lower production-But guidance maintained
Hindustan Zinc: Below estimate due to lower production; But guidance maintained
(HZ IN, Mkt Cap USD16.4b, CMP INR268, TP INR295, 10% Upside, Neutral)
- HZL's 1Q EBITDA of INR27.1b (-25% QoQ, +14% YoY) came in below our estimate of INR30.8b due to lower-than-expected production and higher cost, partly offset by better metal premium. EBITDA includes a wage negotiation impact of ~INR1.2b pertaining to the previous years.
- Mine production declined 17% QoQ (-9% YoY) to 212kt, as production will be skewed toward 2H. Zinc sales declined 19% QoQ (to 170kt), lead sales fell 16% QoQ (to 42kt) and silver sales declined 16% QoQ (to 141t).
- Reported CoP increased 13% QoQ (7% YoY) to USD1,043/t, led by lower production, an increase in prices of met coke, coal and diesel, a higher wage bill, and lower materialization of linkage coal (only ~7%).
- PAT declined 23% QoQ (+2% YoY) to INR19.2b (est. of INR23.8b). The miss can be attributed to a higher-than-expected tax rate.
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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