MOSL: HINDUSTAN ZINC (Neutral)-In-line-On track to achieve 1.2mt mine production capacity
HINDUSTAN ZINC: In-line: On track to achieve 1.2mt mine production capacity; Zinc price outlook positive but priced in; Maintain Neutral
(HZ IN, Mkt Cap USD15.9b, CMP INR268, TP INR273, 2% Upside, Neutral)
- EBITDA increased 22% QoQ to INR28.4b (in-line) in 3QFY19, led by higher volumes and a 4% rise in zinc LME. Other income grew 40% QoQ to INR5.5b, driven by mark-to-market gains. PAT rose 22% QoQ to INR22.1b (in-line).
- Mine production increased 6% QoQ (3% YoY), while refined metal production rose 15% QoQ, led by higher concentrate availability.
- Zinc/lead/silver sales increased 17%/10%/11% QoQ to 187kt/54kt/178t.
- Reported cost of production (CoP) declined USD37/t QoQ to USD997/t owing to higher volumes and lower diesel cost, partly offset by higher mine development expenses.
- CoP is guided to decline by ~USD50-100/t in 4Q, given higher linkage coal availability and volumes. Capex guidance is lowered to USD350m from USD400m due to delays in a few projects. Mine production capacity is expected to reach 1.2mt by end-FY19.
- Expansion projects: Commissioning of the fumer project is expected in 4QFY19. RA mine shaft commissioning is delayed by a few quarters to 2QFY20, while SK mine shaft is expected to commission soon.
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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