Moneycontrol
Oct 19, 2016 04:06 PM IST | Source: CNBC-TV18

Hindustan Zinc Q2 profit seen down 35%, volumes may be lower

Hindustan Zinc, a subsidiary of Vedanta Resources Plc, is likely to report a 35 percent degrowth year-on-year in profit at Rs 1,491 crore for July-September quarter, according to average of estimates of analysts polled by CNBC-TV18.


Hindustan Zinc, a subsidiary of Vedanta Resources Plc, is likely to report a 35 percent degrowth year-on-year in profit at Rs 1,491 crore for July-September quarter, according to average of estimates of analysts polled by CNBC-TV18.


Total income from operations may fall 17 percent to Rs 3,365 crore in the quarter ended September 2016 compared with Rs 4,033.5 crore in same period last year, impacted by lower sales volumes despite higher realisations.


Operating profit is seen declining 21 percent to Rs 1,700 crore and margin may contract 320 basis points to 50.5 percent in same period due to sharply lower refined zinc and lead metal production.


Factors
-On a YoY basis, the street has already factored in weak results but sequentially there may be an improvement
-Realisations may be higher but offset due to lower mined metal volumes, inline with yearly mine plan
-Results may improve on a sequential basis due to higher production and prices
-Zinc volumes are expected to be lower due to drop in contribution from Rampura Agucha mine


Zinc has been the big outperforming base metal this year:
-Rally can be attributed to depleting supply on account of mine closures
-Demand growth from China


Restricted supply of refined zinc at a global level led to strong zinc prices
-Zinc jumped 45.2 percent in 2016
-LME average zinc prices up 17 percent QoQ and 22 percent YoY
-Lead prices up 9.1 percent QoQ


Sales volumes lower YoY but may recover QoQ:
-Zinc volumes down 35 percent YoY but up 17 percent QoQ
-Lead volumes down 22 percent YoY but up 30 percent QoQ
-Saleable silver volumes down 7 percent but up 19 percent QoQ

Watch out for deferred mining expenses credit which may continue in Q2:
-In Q1FY17, deferred mining expenses credit at Rs 189 crore

Sections
Follow us on
Available On