Moneycontrol
Apr 21, 2017 03:23 PM IST | Source: Moneycontrol.com

Buy Hindustan Zinc; target of Rs 337: Edelweiss

Edelweiss is bullish on Hindustan Zinc has recommended buy rating on the stock with a target price of Rs 337 in its research report dated April 20, 2017.

Buy Hindustan Zinc; target of Rs 337: Edelweiss

Edelweiss' report on Hindustan Zinc

EBITDA exceeded consensus estimates owing to better than expected zinc (Zn) and lead sales volumes. Mined metal (MM) production surged 66% YoY (13% QoQ) to touch the highest-ever level of 312kt. Earnings were also buoyed by robust Zn (up 65%) and lead (up 30% YoY) prices.

Outlook

We are upbeat on HZL as the stock offers twin benefits of EPS growth (11% CAGR through to FY19E) and stable dividend yield of 4-5% for both FY18E and FY19E. The stock has consistently delivered better EBITDA margins and RoEs versus global peers in past 8 years. We maintain ‘BUY/SO’ with a revised target price of INR 337 (INR 335 earlier), implying exit P/E of 13.8x FY19E which is in-line with global peers’ average.

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