Buy Hindustan Zinc; target of Rs 144: A C Choksi

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Buy Hindustan Zinc; target of Rs 144: A C Choksi

A C Choksi is bullish on Hindustan Zinc and has recommended buy rating on the stock with a target of Rs 144 in its January 23, 2012 research report.

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RELATED NEWS Hold Hero MotoCorp; target Rs 2085: Way2Wealth Accumulate Syndicate Bank; target Rs 99: Angel Broking Sell HDFC Bank; target Rs 471: Dolat Capital ALSO READ See previous views by A C Choksi See what other Experts & Brokerages are saying about Hind Zinc See messages about Hind Zinc Hind Zinc BSE | NSE 31/05/12 Are Mutual Funds betting on Hind Zinc?

A C Choksi is bullish on Hindustan Zinc and has recommended buy rating on the stock with a target of Rs 144 in its January 23, 2012 research report.

"Hindustan Zinc Ltd, t he largest integrated zinc & lead producer in the country, has reported a rise of ~1.2% in the net profits for the quarter ended 31-12-11 over the same quarter last year to ~Rs12,736 mn. The profits fell sequentially by 5.3%. During the first nine months of Fiscal 12, its PAT grew by ~31% to Rs41,132 mn as compared to Rs31,292 mn over 9M FY 11. Basic and diluted EPS for 3QFY12 came in at Rs3.01 as compared to Rs3.05 for 3QFY11 and Rs3.18 for 2QFY12. The EPS for 9MFY12 was Rs9.73 versus 9MFY11 figure of Rs 7.41. The EPS for FY11 was at Rs11.6. The company's EBITDA for the quarter declined by ~7%(y-o-y) to Rs14,023 mn. The same figure for 9MFY12 was Rs44,594 mn (y-o-y growth of ~22%). The company registered a q-o-q de-growth of ~4.3% at the EBITDA level for 3QFY12. The net sales for 3QFY12 increased to Rs27,468 mn; showing a growth of ~5.6% over 3QFY11 .On a q-o-q sales increased by 5.9%. The sales growth was on account of higher lead and silver volumes."

"Its PAT Margins decreased by ~320 bps to 46.37%. The margins decreased by ~548 bps over q-o-q. The EBITDA margins declined by ~689 bps (y-oy) and ~543 bps (q-o-q) to ~51.05%.This was primarily lead by 387bps increase in its consumption of raw materials & 188bps increase in power and fuel and a decrease in inventory. The first two contributes more than 50% of its total operating cost. Other Income grew by ~84%. We have a coverage on Hindustan Zinc Limited with a BUY Rating and target price of Rs144, valuing it at 4.60x FY2013E EV/EBITDA, giving it an upside potential of 14% from current price of Rs126.We expect HZL's Sales, EBITDA & PAT to grow at a 2 year CAGR of 17%, 16.6% & 19% respectively till FY 13E. We feel HZL is attractively priced at the current levels of Rs126 and offers a scope for a long term buy," says A C Choksi research report.   

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To read the full report click on the attachment