Hindustan Zinc's third quarter profit is seen falling 30.6 percent year-on-year to Rs 1,650 crore and revenue may decline 11.8 percent to Rs 3,400 crore, according to average of estimates of analysts polled by CNBC-TV18.
Operating profit may drop 27 percent to Rs 1,525 crore during the quarter and margin may shrink 930 basis points to 44.9 percent compared to year-ago period.
Topline may hit by:a) Lower LME prices:-LME average zinc prices during the quarter have declined 28 percent Y-o-Y and around 13 percent Q-o-Q-Rupee depreciation is likely help topline to some extentb) Lower volumes:-Refined zinc production is expected to fall by 5 percent Y-o-Y impacted by higher strip ratios-Volumes hit by higher waste mining at Rampura Agucha EBITDA may be impacted by:-Lower LME prices-Higher cost of production on lower production volumes-Mine development expenses-Partly offset by lower diesel prices Key trigger remains:-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 per share-Low Liquidity in the market as GOI and Vedanta jointly hold 95 percent stake
Globally production cuts may support zinc prices:-In October 2015: Glencore cut 5,00,000 tonne of zinc production in Australia, South America and Kazakhstan-In November 2015: Chinese zinc smelters planned to cut 2016 output by 5,00,000 tons
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