Buy Hindustan Zinc, tgt Rs 846: Religare

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Buy Hindustan Zinc, tgt Rs 846: Religare

Reliagre has maintained buy rating on Hindustan Zinc with target price of Rs 846. Current valuations present an attractive entry point due to recent underperformance of the stock owing to a bearish outlook

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Reliagre has maintained buy rating on Hindustan Zinc with target price of Rs 846 in its June 16, 2008 report. "Commissioning of an 88,000tpa de-bottlenecking project ahead of schedule would provide volume growth for Hindustan Zinc, while production cost is set to decline due to captive feedstock links and increasing byproduct prices. Current valuations present an attractive entry point due to recent underperformance of the stock owing to a bearish outlook on zinc prices and limited liquidity (on account of low free float). Currently trading at a P/E of 6x and EV/EBITDA of 4.5x on FY09E. We expect the company to generate cash per share of Rs 237 in FY09E and believe the worst has already been factored into the stock price" according to Religare report.

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