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Angel neutral on Hindustan Zinc
Angel Broking has recommended a neutral rating on Hindustan Zinc (HZL). HZL currently has a zinc-lead capacity of 7.54 lakh tonnes and is planning to expand it to 1 million tonnes by 2010. At Rs 334, HZL is trading at 5.4x and 7.9x FY2009E and FY2010E Earnings, respectively.
Angel Broking has recommended a neutral rating on Hindustan Zinc in its December 19, 2008 research report. "HZL currently has a zinc-lead capacity of 7.54 lakh tonnes and is planning to expand it to 1 million tonnes by 2010. At Rs 334, HZL is trading at 5.4x and 7.9x FY2009E and FY2010E Earnings, respectively. However, it is trading at EV/EBIDTA of 1.6x and 1.8x FY2009E and FY2010E EBIDTA, respectively. We assign the down-cycle average EV/EBIDTA of 2.5x to HZL and arrive at a target price of Rs 364. However, due to the weak zinc outlook going forward, an expected surplus in next 2 years and falling zinc prices and margins, we initiate coverage on the stock with a Neutral recommendation," says Angel Broking's research report.
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