Hold Hindustan Zinc; target Rs 134: R K Global

13955 Investors following Hind Zinc. Share this News with them.

0

Like this story, share it with millions of investors on M3

Hold Hindustan Zinc; target Rs 134: R K Global

R K Global has maintained hold rating on Hindustan Zinc (HZL) with a target price of Rs 134 in its January 21, 2012 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Buy Federal Bank; target Rs 510: Motilal Oswal Buy Grasim Industries; target Rs 2,666: Motilal Oswal Accumulate KPIT Cummins; target Rs 213: Arihant capital ALSO READ See previous views by R K Global See what other Experts & Brokerages are saying about Hind Zinc See messages about Hind Zinc Hind Zinc BSE | NSE 01/06/12 Are Mutual Funds betting on Hind Zinc?

R K Global has maintained hold rating on Hindustan Zinc (HZL) with a target price of Rs 134 in its January 21, 2012 research report.

"Hindustan Zinc (HZL) reported revenue growth of ~5.9% to Rs 27868mn well below our expectation of 33.3% of Rs 35076mn in Q3FY'12 due to the correction in the metal prices and low growth in output. Operating profit grew marginally by ~3.9% lower than our expectation. EBITDAM too declined ~14.6% during the quarter with sluggish revenue growth. EPS accredited at Rs 3.01/share during the quarter."

"HZL has registered revenue growth of ~6% at Rs 27868mn during Q3 below our expected growth of ~33.3% at Rs 35076mnon the back of huge correction in the zinc and lead prices by 22% & 20% respectively during Q3. During Q3, average Zinc and Lead LME prices were $1,897 per ton and $1,983 per ton respectively, compared with $2,315 per ton and $2,390 per ton, in the corresponding prior quarter. We expected that the company will report voluminous growth but disappointed the street with the fall in the mined metal by 6%Y-o-Y at 209Kt. However, refined metals production increased during the Q that supported the revenue growth of the company."

"HZL reported EBITDA declined to Rs 13639mn in Q3FY'12 compared to Rs 15024mn in Q3FY'11 (our estimate was Rs 22444mn). The company's total expenditure as a percentage of sales grew by 19.5% impacting the operational profit of the company. INR depreciation during the quarter led total zinc cost to increase by 13%to Rs 40,300/MT. EBITDAM slew by 14.5% to 49% compared to 57% of corresponding quarter of previous year. PAT too declined by 1.2% Y-o-Y at Rs 12736mn in Q3FY'12 (our estimate of Rs 19646mn) compared Rs 12895mn in Q3FY'11."

"At current market price of Rs 126, the stock is trading at EV/EBITDA of ~6x of its FY13E, EBITDA of Rs 77796mn. We valued the company taking conservative view due to slow industrial growth and volatility in global metal prices. However; we expect that silver business will be a key trigger for this business which is expected to contribute 16% towards top line from current 6%. Further the company is fundamentally strong with huge cash reserve Rs 16229crs as on Sep'11. We maintain our earlier target price Rs 134 assuming FY12 and FY13 zinc price at Rs 1900/ton our USD/INR estimate of Rs 48 per dollar and Rs 50 per dollar for FY12 and FY13. At our target price is reduced to Rs 134.50 we recommend our investors to "Hold" the stock with upside potential of ~6% from current level," says R K Global research report.

What stocks does Templeton hold?

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment