Hindustan Zinc's first quarter profit after tax is likely to increase by 3.2 percent year-on-year to Rs 1,660 crore and total income is seen rising 22.7 percent to Rs 3,690 crore, according to a CNBC-TV18 poll.
Operating profit in Q1 may jump 12.8 percent to Rs 1,525 crore but margin may decline 370 basis points to 41.3 percent compared to same quarter last year.
Analysts believe strong volume growth and higher zinc LME may drive Y-o-Y sales growth. Zinc LME rose by 7 percent Y-o-Y but LME lead and LME silver lost 7-11 percent during the same period.
In Q1FY15, there was a blip in production numbers, so year-on-year may look great on topline.
According to analysts, the growth in operating profit may be led by higher volumes and zinc prices. However, margin may get impacted by higher provisions towards contribution to District Mineral Foundation costs (Hindustan Zinc has decided to go for 100 percent provisioning) and higher energy costs.
Key triggers:-Government’s stake sale in Hindustan Zinc remains a key near-term trigger-Progress on acquisition of 29.5 percent stake in company by Sesa Sterlite may drive the stock-Vedanta’s current offer is approximately Rs 150/share-Low Liquidity in the market as GOI and Vedanta jointly hold 95 percent shares.
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